How Can a Probate Court Process Be Avoided?

Use these links to jump to different sections:

• What Is Probate and How Can I Avoid It?
• Revocable Living Trust
• Naming Beneficiaries on Retirement and Bank Accounts
• Joint Ownership of Property
• Benefits of Avoiding Probate
• Questions for an Estate Planning Attorney

Probate is the legal process of distributing a person’s assets when they die.  

Probate is required if a person has a will. It’s also required if a person dies without an estate plan of any kind. Without a will, state intestate laws govern the distribution of assets. 

Probate can be an extremely stressful and time-consuming procedure. Sometimes, individuals want to avoid it altogether.  

Fortunately, there are various strategies for avoiding the probate process. 

You can avoid the probate process “By preparing and executing a trust or naming beneficiaries on your accounts,” says Ohio estate planning and probate attorney Jay E. Michael. “Either way, it passes outside the court’s control.”  

This article will look at various ways to avoid the probate process. Once you have an overview of the options, it’s essential to speak with an estate planning lawyer about your particular situation.  

The best estate plan for you “Depends… some people come in and want wills; some want trusts,” says Michael. “I talk to them about the pros and cons of each of them and let them decide.”  

The important thing is “the client is comfortable with whichever way they choose,” he says.  

What Is Probate and How Can I Avoid It? 

Probate is a court-administered distribution of a person’s assets when they die.  

Probate laws set the rules for the process and vary depending on the state you live in.  

Assets cannot be distributed to beneficiaries until the probate process is completed. A formal probate procedure can take several months or even years, depending on how complicated the estate is or if any litigation is involved.  

If your estate qualifies as a small estate, you may be able to follow your state’s simplified probate procedures for a quicker process. 

Probate is required whether the deceased person has a will or not.  

• With a will, probate distributes estate property according to the will’s provisions. To initiate the probate process, an executor or personal representative of the estate files a petition with the local probate court.   
• When a person dies without a will or trust, intestate succession laws of the state where the person lived and died kick in and distribute assets.  

Probate assets generally go to: 

• Surviving spouse, heirs, or other beneficiaries 
• Settlement of the deceased person’s debts 

Without a last will and testament, an individual cannot control how their assets are distributed in probate. Relying on state intestate laws might mean the person’s wishes are not fulfilled.  

It’s important to have a will in place to avoid intestate succession. However, there are ways to avoid probate entirely. The main strategies are: 

• Creating a revocable living trust 
• Naming beneficiaries on accounts 
• Sharing ownership of property 

Each of these methods takes assets out of the probate estate. Let’s look at each in more depth. 

Revocable Living Trust 

An estate owner (called a grantor) sets up a living trust using a legal document called a trust agreement.  

The grantor puts in the trust all the assets they want distributed to their beneficiaries when they die.  

With a revocable living trust, the grantor maintains control of the trust. They can change the trust as they see fit until they die or become incapacitated. 

The trust agreement also appoints a “successor trustee” who controls the trust when the grantor dies or becomes incapacitated.  

Since the successor trustee owns the estate property at the grantor’s death, the property is protected from probate. 

The successor trustee distributes the estate property to the beneficiaries. Unlike assets in a will that must go through probate, assets in a trust are immediately available to beneficiaries when the grantor dies.  

Trusts tend to be much more complicated than wills, and it’s wise to get the help of an estate planning lawyer to ensure everything is legally prepared. 

Naming Beneficiaries on Retirement and Bank Accounts 

Another common way to protect assets from probate is to have named beneficiaries on your accounts.  

Having a beneficiary named on an account means that the account is directly paid out or transferred to that person when you die, avoiding the probate process entirely. 

There are two types of accounts that allow for beneficiary designations: 

• Payable on death (POD) accounts. PODs include: 
  • Bank accounts (checking and savings) 
  • Life insurance policies 
  • Retirement accounts, including IRAs and 401(k)s 
• Transfer on death (TOD) accounts. TODs include stocks and bonds and brokerage accounts. 

Joint Ownership of Property  

The other primary way to avoid probate is through joint ownership of property.  

Joint ownership is often used with real estate and other types of personal property. 

There are a few different types of joint ownership arrangements you can use: 

• Joint tenancy with right of survivorship. Joint tenants own a piece of property together. With the right of survivorship, when one of the joint tenants dies, the property automatically passes on to the surviving owner without needing the probate process. 
• Tenancy by the entirety. This arrangement is similar to joint tenancy but is specifically for married couples. The couple shares ownership of the property. When one of the spouses dies, the property automatically passes on to the surviving spouse. 
• Community property with right of survivorship. Several states have community property arrangements instead of tenancy by the entirety. Ownership of assets, such as a house, car, income, etc., is split evenly between the spouses. Like property in tenancy by the entirety, survivorship community assets automatically pass to the surviving spouse when one spouse dies. 

Benefits of Avoiding Probate 

There are several benefits to avoiding the probate process, if possible. Some of the major benefits include: 

• Avoiding delays. With probate, beneficiaries must wait until the process is complete to receive estate assets. The delays can be significant depending on how complicated or contested the probate process is. 
• Increasing privacy. In probate court, your estate becomes a matter of public record. Through non-probate transfers, your estate assets are kept private. 
• Reducing stress. Probate can be a very stressful, time-consuming process for your loved ones. At times it can lead to litigation and rivalry. Avoiding it altogether can eliminate major hassles for your surviving family members and friends. 

Questions for an Estate Planning Attorney 

Many lawyers provide free consultations for potential clients. These meetings let you get legal advice and decide if the attorney or law firm meets your needs. 

To get the most out of a consultation, ask informed questions such as: 

• What are your attorney’s fees and billing options? 
• Given my types of assets, what is the best way to avoid probate? 
• If I gift an asset to protect it from probate, will it be subject to a gift tax? 
• What is the process of creating a living trust? 
• How do I name beneficiaries on an account? 
• How do I set up joint ownership? 

Once you have met with a lawyer and gotten your questions answered, you can begin an attorney-client relationship. 

Look for an estate planning attorney in the Super Lawyers directory for legal help.