For some estates, probate can be a long, expensive, and complicated process. If you want to know how to avoid probate, this article gives you a high-level view of some options for doing so. However, keep in mind that it is unusual for just one of the following tools to work for all your assets. You will need different tools to transfer different types of assets. Often, people will use a combination of these tools to bypass probate while still accomplishing their estate planning goals.
(Related: How Does Probate Work? A Beginner’s Guide)
With that in mind, let’s get started:
If you create and properly maintain a trust while you are alive, your estate will not have to go through probate. A trust can be set up to own your assets while you are alive and then distribute them the way you want when you die. Because your assets are owned by your trust and not you at the end of your life, there is nothing to go through probate (even though you control the trust and the assets in it until you pass). There are many reasons people use trusts as one of their estate planning tools, but avoiding probate is a big one.
[Related: 4 Key Benefits of a Trust]
Beneficiary designations are an agreement between you and your bank or financial institution about where your funds should go when you pass. Beneficiary designations are private agreements, and they take priority over a will or a trust. Because they pass funds directly to the beneficiaries you’ve chosen, your assets in these accounts do not go through probate. If most of your assets are money accounts, you may be able to pair beneficiary designations with some of the other tools in this article to avoid probate.
Keep in mind that beneficiary designations cannot pass on real property or tangible personal property.
In Virginia, if the combined total of your personal property is under $50,000 when you pass, your estate is considered a small estate. In this case, instead of your estate going through probate, your beneficiaries can use a Small Estate Affidavit to claim your assets.
This is one option for avoiding probate, but it can be difficult to predict if your estate will qualify as a small estate. If you want to guarantee that your estate will not go through probate, you should use some of the other tools to create a definite plan.
Right of Survivorship
Right of survivorship is a way of owning an asset with another person that automatically gives the co-owner full ownership at your death. For example, if you and your spouse co-own your house, your spouse would automatically become the full owner of the house when you pass. If you are trying to avoid probate, you can use this rule to your advantage by titling your assets in someone else’s name alongside yours and including the right of survivorship in the title. Of course, making someone a co-owner gives them control and could result in additional taxes or liability claims. So, using the right of survivorship to avoid probate should be done carefully.
Right of survivorship applies to financial accounts, land, vehicles, and anything else titled in your name, but it does not work for tangible personal property.
How to Avoid Probate in Your Individual Situation
If you think avoiding probate is the best option for you, your family, and your assets, the best thing you can do is start by meeting with an experienced estate attorney. They will be able to help you choose the right tools to pass your assets on without going through probate.
[Related: Can You Avoid Probate? Should You?]
Are you ready to create your estate plan? Schedule an appointment with us! We would love to get to know you and help you created a personalized plan to accomplish your end-of-life goals.