In today’s world, people want to avoid probate like they want to avoid the plague. It is true that probate is more expensive in terms of time and money than reasonable estate planning. For those who don’t know, probate the judicial process by which the property of a deceased person is distributed to those who are entitled to it; the heirs or beneficiaries.
The first notion to dispel is the idea that a Last Will avoids probate. In fact, a Last Will is a ticket to probate. The Last Will is there to guide the executor or personal representative and the Court how to distribute the assets of the deceased. Not having a Last Will leads to probate as well; although there are some exceptions for small estates..
The way to get around probate is to execute “non-probate transfers.” If a person has successfully executed non probate transfers for all of his or her property, a Last Will, at least with respect to the property, is unnecessary. However, often times individuals do not make arrangements for ALL of their property and in this case, the Last Will acts as a safety net for the property that has not been accounted for.
The Last Will provides guidance as to their distribution (ie, to whom and in what quantity). Failure to have a Last Will in a situation where property was not otherwise disposed of, will result in an application of the intestate succession rules. These rules are provided by State law. With some variation the State succession rules will distribute property to the spouse and kids first. As such, it accomplishes the goals of most individuals..
Non-Probate Transfers .
A non-probate transfer is one that, like the name says, avoids probate. State laws provide a non-probate procedure for many kinds of property: For real estate, many states provide a so-called beneficiary deed or transfer on death deed; For bank and money accounts, there is the concept of pay on death; life insurance policies have beneficiary designations which act as a pay on death; Cars can also be transferred on death using a beneficiary designation..
Another method to transfer property is to place the property in Joint tenancy. When property is jointly owned the property will be transferred in full to the surviving joint owner. If a father placed his son’s name on the deed of his home in joint tenancy, the property would transfer to the Son on Father’s death automatically..
Last but not least is the inter-vivos Trust. The inter-vivos trust or the living trust is by far the most popular mechanism for completing non probate transfers. This is because the trust permits the grantor or settlor (the individual who creates the trust) to decide how the property will be distributed. This is done by direction in the trust to the successor trustee, a person the grantor selects, on how to carry out the wishes of the grantor. » Read more: How to Avoid Probate