How To Avoid Probate in 3 (or 4) Simple Steps
Probate is the legal process of administering a person’s estate after their death, ensuring assets are distributed to the next heir, and satisfying any liabilities. In my experience, everyone would like to avoid probate, where possible. It can be costly and time-consuming; an added difficulty for a family experiencing a loss.
Here is a quick summary of 3 steps that you can take to avoid Probate:
- If you’re married and own property, make sure it is owned with your spouse as joint survivors, with rights of survivorship. I don’t recommend this universally if you want the property to transfer to your children, for various financial and tax-related reasons. But, if you’re married and plan for your spouse to inherit your property if you pass, making sure your property is owned in joint survivorship is an essential first step.
- Use Transfer-on-Death Designations for Land, Vehicle Titles, LLC Membership interest, Stock Certificates, and the like. Transfer on Death Designations, not surprisingly, direct that property be transferred on death directly to the individual(s), trust, or entity you list. For real property (aka land or real estate), even if your property is owned in joint survivorship as noted in (1), you can still use a Transfer on Death Designation Affidavit to direct who your real estate shall transfer to upon the death of the last of the property owners. Instead of going through probate, a simple Affidavit is filed after the death of a property holder, by any beneficiary, and that effectuates the title transfer to the names of the beneficiary or beneficiaries.
- Many other types of property can be transferred with a transfer on death designations. Ohio Bureau of Motor Vehicles provides a form that you can use to create a transfer on death designation for vehicle titles of all types located in Ohio. Even interest in LLC’s or shares of a corporation can be transferred using this format. Speak with an attorney if you have questions about using this avenue for your business interest or personal property.
Make sure all life insurance plans, annuities, retirement plans, bank accounts, health savings accounts, and anything else that has the option, has appointed Transfer on Death or Payable on Death, beneficiaries. This will need to be done with the institution that holds your funds or account. It is important to note after you make those designations, if you later change your mind, you MUST go to that the institution holding your account or plan and make sure to update your beneficiary! Updating a Will later won’t change these beneficiaries.
Bonus #4: If these options don’t work for you, either because you want to distribute funds at certain times to beneficiaries, or for a variety of other reasons, Trusts are also a great way to avoid probate. Please note, however, that the Trust becomes the entity holding title to all property; any property not in the Trust at the time would have to go through probate as well.
And those are three simple steps you can take to avoid probate (with a bonus fourth avenue of the Trust).
Make sure you speak with your estate planning attorney if you have questions about whether your estate is set up in a way to make it as easy as possible on your beneficiaries. If you are not sure if your property will avoid probate, or have a question related to estate planning, feel free to give the White Law Office a call, and we would be happy to assist you.
Attorney At Law