If you have ever heard of Probate, or heard someone talking about Probate, it is usually in a negative light and in terms of avoiding it (or wishing they had avoided it).
Recently, I have shared some information on what Probate is, when Probate is required, the typical cost of going through Probate, and the most surprising bit of news I ever get to share, when a surviving spouse is required to go through Probate.
But, how do you (or I) avoid Probate? I will offer three potential different paths to avoiding Probate to chew on.
First, don’t own enough assets that would “require” Probate. Typically, if you have less than $100,000 of Probate-able assets and you do not owe any real estate, you can, and might want to avoid going through Probate. Although initially, this does not sound ideal, a large portion of our population fall into this category.
Second, you can try to piecemeal a plan together to avoid Probate. Update the Beneficiary Designations for ALL of your financial accounts, update all of your title-able personal property into an ownership status called community property with rights of survivorship, and update the ownership of all real estate into the ownership status of community property with rights of survivorship. This step typically only helps avoid Probate for the first spouse to pass away in a married couple. Also, this step has severe inheritance consequences that are too complex to cover in a simple blog post. Please know that I recommend against updating your ownership of these assets without first consulting an estate planning attorney to discuss the consequences of your potential decision.
Third, is a Living Trust or sometimes called a Family Trust. A Trust is a universal solution that covers all types of property upon the death of both spouses. In my opinion, this is the best option available to avoid Probate. A Trust that is properly established and maintained (not difficult, but certain actions will need to happen in the future), it will avoid probate entirely, including the delay and the expense, upon the death of both spouses.
That’s why so many people understand that a Living Trust or Family Trust is the best option for avoiding the time and delay of probate.