How to Avoid Probate in Estate Planning?

When Elvis Presley passed away in 1977, his own estate was worth approximately $10 million. Subsequently came the probate. After deducting all the fees: appraisal, legal, executor's fees, as well as estate tax, the estate was decreased to a $3 million. What happened to the 73% of Elvis' estate? The simple answer is: probate.

Then, what is probate? It is the procedure of verifying if a will is valid and ensuring that nobody challenges against it. Probate clears the estate of debts, through paying creditors with the estate. All this sometimes undergoes a very long court procedure, which may require a fortune from the estate. Whether a person owns a will or not upon his demise, the estate have to go through probate.

 

How to Avoid Probate in Estate Planning?


However, it is always possible to avoid probate court procedure. Among the best strategies is to create a trust. Once properties or assets are in a trust, they are going to avoid the probate court and may proceed straight to the beneficiary, pretty quickly. All these assets may also be shielded from creditors using a trust.

You may also safeguard your assets from all costs of probate by frequently updating the named beneficiaries in your life insurance policies, 401K or IRAs. If you do so, you may avoid unwanted inheritances, as these designations are certainly not subject to probate.

The two options above are definitely not your only choices. You may also choose to own property with another person. When you own something with another person and something bad were to happen to you, it would automatically go to your heir. Certain banks also assist you to create a Transfer on Death (or TOD in short) account, in which you may nominate a beneficiary to your own private banking accounts. These accounts would instantly pass to the beneficiary upon your demise and avoid the probate court procedure.

An alternative choice to avoid probate court procedure would be to hand out your assets to your relatives when you are still alive. By doing that, you lower the property amount that has to go through probate after your death.

If you do your estate planning properly through an attorney or some other financial experts, you may reduce probate costs significantly. There are very few people who choose to contemplate what is going to happen after they leave this world, but the thought of your family not inheriting the things you give to them is unpleasant as well. A little planning in advance may save your heirs a fortune ultimately. The estate of Elvis Presley was clearly overlooked and his premature death costs his beloved daughter along with other heirs millions of dollars. Through Elvis' daughter, Priscilla Presley, Lisa Marie was able to restore the Presley estate, which presently has a net worth of approximately $250 million.
 

What are the Most Popular Strategies to Avoid Probate Court Procedure?


It is not difficult to avoid probate court procedure. Some people may use these easy and effective strategies to make sure that all, or part, of their property goes straight to their beneficiaries, without moving across probate court.
 

Revocable Living Trust


Living trusts have been created as a tool in estate planning to help people avoid probate court procedure. The benefit of holding your property in trust is always that upon your demise, the trust property will not form a part of your ultimate estate for probate reasons. It is because a trustee and not you, who owns the trust property. Upon your demise, the trustee can simply and quickly move the trust property to the relatives you intended to give to, without having to go through probate. You state in the trust document which persons you would like to give the property.
 

Pay-on-Death Accounts


You may convert your personal bank and retirement accounts to pay-on-death accounts. This can be done by completing a simple form where you specify a beneficiary. Once you pass away, the money will go straight to your heir without moving across probate.
 

Joint Ownership of Property


Some kinds of joint ownership give a quick and easy method to avoid probate court procedure if the first owner passes away. To take title with another person in a manner to avoid probate court procedure, you express the way you wish to hold title on the document that indicates your ownership. Normally, no extra documents are required. If one of the owners passes away, the property would go to the joint-owner without probate.
 

Gifts


Handing out property when you are alive helps avoid probate court procedure for a simple reason: Unless you own it upon your demise, it will not undergo probate. That reduces probate costs because, in general, the larger the value of the property that undergo probate, the larger the cost.

 

Consequently, a proper and comprehensive estate planning is very important if you wish to make sure what you want to give as legacy reaches your heirs.

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