Probate is the general process of handling someone’s assets after they die. The executor of your will does the work during probate. This person could be court-appointed, or you could name them in your will.
The executor’s first responsibility is handling the deceased’s leftover debt. Afterward, they distribute all property to its intended recipient.
Usually, people want to avoid probate if they can. There are many drawbacks to this process.
First, probate leaves little privacy for the deceased or their surviving loved ones. It is a court matter, so it goes into the public record. The public can go through these records to see exactly what was in your estate and who received those items.
Next, probate can be costly. It comes with fees paid to the court, to the attorney handling the probate and to your executor/administrator.
Probate can also be time-consuming. Your beneficiaries cannot simply claim their property and walk away. Property must go through an official transfer. This means paperwork and waiting on others to sign their portion of the documents. Furthermore, this added time can increase the cost of probate when you are paying an executor.
All these complications lead many to look for a better way to hand their property to loved ones after death.
Here are three ways you can avoid probate at no extra cost. (To be clear, when we say these options are “no cost,” we’re talking about the transfer of property itself. There may be some up-front fees associated with executing these plans. Also, you will want help from an attorney to make sure these agreements are written in a proper, legally sound way.)
Transfer Your Property Through a Trust
A trust is like a living financial entity. It can accumulate money through investments, property sales, and so forth. No human directly owns the property inside a trust. The trust is the owner.
Because of this fact, transferring property through a trust is a much cleaner, easier process. Imagine signing a car lease over to a family member. Sure, there is some paperwork and waiting involved, but generally, it is a painless process.
Transferring property from your trust requires similar steps. The trustee can handle all the paperwork, and afterward, your recipient can receive their assets.
Establish Joint Tenancy
Put simply, joint tenancy allows you to make someone the co-owner of a piece of property. Couples often use this option for their home. Joint tenancy gives each owner an equal stake in the property. It is not a 50/50 split.
People who participate in joint tenancy have the “right of survivorship.” If either of the two owners dies, the other receives full ownership of that property. Many states offer joint tenancy to married couples only. California, however, allows people to establish co-ownership outside of their immediate family. This is good news for unmarried couples as they can still benefit from this system.
Add a “Payable on Death” Stipulation to Your Money
At your bank, you should have the option to let your money go to another person after you die. This is called “payable on death,” or POD. This stipulation should activate as soon as the bank receives word of your death. From there, your beneficiary will have immediate access to any accounts with PODs attached.
Your beneficiary will have no access to your money while you are alive. If you want, you can spend all the money in your POD accounts without consequences. A POD simply transfers whatever money is left over to your beneficiary.
Our firm is here to help you build a sound estate plan. We can help you avoid some of the more troublesome aspects of transferring assets. For a free consultation, contact us online or call us today at (310) 526-3433.