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Why would you want to avoid the probate process?

On Behalf of | Jan 29, 2016 | Estate Administration And Probate |

An estate plan is a written instrument used by individuals in California and elsewhere to pass their assets and property to their heirs and beneficiaries. In order for these assets to be transferred after the person’s death, the probate process will need to be initiated. This legal process considers the contents of the deceased’s estate, sorting through their personal affairs. A will is generally used to dictate how property and assets will be transferred, however, even when a will is available, the probate process could become rather complex and lengthy.

Generally, the probate process can take much time and cost much money. That alone is a reason why many seek to avoid it. Additionally, the probate process could also result in an heir inheriting less than what the deceased intended.

There are four general ways to do this. The first way is joint property ownership. This means that you jointly own the property with another person, likely a spouse, with the right of survivorship. Upon death, the deceased joint owner no longer owns the property and ownership passes to the living joint owner. There are three common ways to create this, which include joint tenancy with a right of survivorship, tenancy by the entirety and community property.

The next way to avoid probate is through death beneficiaries, which are financial assets or instruments that allow the holder to designate a beneficiary upon their death. Common financial assets that allow for this include Payable on Death Accounts, retirement accounts and transfer on death registrations.

A third way to avoid probate is by having a revocable living trust. This is when the holder of the trust transfers property to someone else, a trustee. The trustee holds it for the owner’s benefit while the owner reserves the right to revoke the trust. Essentially, this means that the trustee owns the property but must use it for the owner’s benefit under the terms and conditions of the trust. The owner of the trust could instruct the trustee to transfer the property to family and friends upon their death, allowing them to avoid the probate process.

Finally, the last way to avoid the probate process is to gift away property and assets before death. This does require some planning in order to avoid gift taxes. Therefore, it might be suitable for smaller and less valuable assets and property.

Source: Estate.findlaw.com, “Avoiding the Probate Process,” accessed Jan. 25, 2016

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