“Probate avoidance” means making choices now and taking certain intelligent actions now that will prevent the necessity of a probate court having to intervene to make those choices for you later on. Probate proceedings can be required during your lifetime should you become incompetent or upon your death to manage the affairs of your estate. Most such cases are expensive, and can usually be avoided with less expense and risk involved.
Incompetency proceedings during your lifetime are best avoided by using durable powers of attorney for finances and durable powers of attorney for health care to empower others to make decisions for you when you cannot.
For decedent’s estates, probate court can usually be avoided by creating a revocable trust as a new legal entity and transferring all your assets to the trust. The trust would name who would conduct the trust’s affairs as trustee, and who would be the beneficiaries. During your lifetime, you can be the sole beneficiary of the trust, and you can then specify who will take the assets when you die, all without need of probate. You can be the trustee during your lifetime, and designate who will take over for you when you die … all without need of a probate court to take any action.
In some situations, having others owning or co-owning your property can make property “non-probate property,” meaning that no probate court supervision is needed to pass that property to others when you die. There can be risks creating co-ownership of assets to avoid probate that require careful attention. Beneficiary designations on certain assets like life insurance or IRA accounts may act to pass those assets to others when you die, but likely won’t be available for all assets like ordinary bank accounts, personal property, cars, or real estate.
Whether probate avoidance is right for you requires a careful review of all your assets and your circumstances. It is not right for every person or every situation. For example, naming your children as co-owners of all your property may be effective to avoid a probate estate, but it also makes that asset as much theirs as yours. In the event of their death before you, or creditor problems of their own, or a divorce, your assets could be swept away from you in their working things out. Gifting away all your
|“Avoiding probate can save a lot of money or it can wreak havoc on your affairs without legal attention.”|
assets trusting a child or relative to manage them for you places you at the mercy of their continued good will, which may or may not be something comfortable for you or for them. Taking incomplete steps to avoid probate, such as transferring some but not all of your assets may remove those assets from a probate jurisdiction, but a probate proceeding as to the rest of your property may still be needed to handle the rest, perhaps frustrating your overall goal.
When you contact us to plan for your estate, if probate avoidance is the goal, we’ll work with you to be sure that everything you own is appropriately addressed. Start by preparing our Estate Planning Questionnaire. We will review with you the pros and cons of different options as to each piece of property to see whether co-ownership, beneficiary designations, or creation of a trust is best suited to address your circumstances. We will instruct you how to take ownership of things in the future so that your objective of avoiding probate is not compromised or defeated by what you do later. We will then work with you to create the documents and make any necessary transfers to accomplish your goals.