Probate can be a lengthy and expensive process, often causing stress and delays for loved ones left behind.
Fortunately, there are steps you can take to avoid probate and ensure a smooth transfer of your estate to your beneficiaries.
Plan ahead with a will
In 2023, only 46% of individuals over 55 years of age had a will. Creating a will is the first step in estate planning. A will allows you to specify how you want to distribute your assets after your death.
Consider joint ownership
One way to avoid probate is to hold property jointly with someone else. Joint ownership allows assets to pass directly to the surviving owner, bypassing probate entirely. You can do this through joint tenancy or tenancy in the entirety, depending on your relationship with the co-owner.
Utilize beneficiary designations
Certain assets, such as life insurance policies, retirement accounts and payable-on-death bank accounts, allow you to designate beneficiaries. Regularly review and update your beneficiary designations to reflect any changes in your life circumstances.
Establish a trust
A trust is a legal arrangement that allows you to transfer assets to a trustee, who holds them on behalf of your beneficiaries. Unlike a will, a trust does not go through probate, which can save time and money. Additionally, a trust offers greater privacy and control over how your assets get distributed.
Gift assets during your lifetime
Consider gifting assets to your loved ones during your lifetime to reduce the size of your estate. The annual gift tax exclusion allows you to give a certain amount of money or property to each recipient without incurring gift taxes.
Your estate plan is legally binding. It can avoid or reduce probate and prevent disputes among family members.