How To Avoid Probate In 2024

In most states, there is a simplified procedure for the transfer of wealth in small estates when there’s not a lot of money and property changing hands. Eligibility for these simplified proceedings can vary depending on things like the value of the estate, what types of property are being transferred and who the heirs are.

If your estate qualifies for a simplified procedure, you may assume you don’t need to do anything else. However, even though this process is simplified, it typically still does require some involvement with the court system. Not only that, but it also means that creditors can still come after estate assets, and estate taxes may still need to be paid.

As a result, you may still want to do more to help your loved ones more easily inherit assets even in circumstances where your estate is eligible for a simplified process.

Gifting your assets during your lifetime is another option. This option involves simply transferring money and property to your heirs before you die. There’s an annual gift tax exclusion and if you make a gift below this amount, it will not be taxable.

In 2023, you are allowed to give away up to $17,000 per person without triggering gift tax. This means if you and your spouse have two children, you are each allowed to give $17,000 to each child this year. You could transfer a total of $68,000 of your wealth.

Gifting assets is a simple way to avoid having property transfer through your estate since you won’t own the property at the time of your death. However, it’s not the best option in all circumstances as you may not want to give away a substantial amount of your assets while you are still alive.

When you create a trust you can facilitate the transfer of assets outside of probate. You can transfer money and property to the trust, which will become the new legal owner. You will designate beneficiaries to the trust who the assets are intended to benefit, and you’ll name a trustee who manages the property.

Since you no longer own the property put into trust, it will not be part of your probated estate when you die. However, exactly what does happen will depend on the kind of trust you create.

If you create a revocable living trust, you are able to change or modify the trust whenever you want and largely retain control over your assets during your lifetime. Unfortunately, because you do retain so much control, the assets that are held in the living trust can still be subject to estate tax and creditor claims.

If you create an irrevocable trust, you cannot easily modify the terms so you get stronger asset protection. In some circumstances, these trusts can allow you to avoid estate taxes on the money and property you transfer to loved ones.

If you own property with someone else, you may be able to facilitate the transfer of that property outside of court proceedings depending on how you take title.  This can include property like a home or vehicle. If you have jointly owned bank accounts or joint investment accounts, the assets within those accounts can also be co-owned and go to the other owners upon your death.

In some cases, the way in which you take title to a property—or the way in which you structure ownership—will determine how the assets are transferred. For example, property can transfer to a co-owner without court involvement if you hold title in the following ways:

• Joint tenants with rights of survivorship. With this option, you and your co-owners each have a separate legal interest in the property. However, when you pass away, your interest in the property passes automatically to your co-owner. You can’t choose to leave it to someone else. Anyone can choose this method of taking title to property.
• Tenants by the entirety. This is an option open to married couples in some states. Both spouses own the entirety of the property together and they own it as one entity. Neither party could transfer their interest to others, and each spouse retains their full interest in the property after the death of their co-owner.
• Community property with right of survivorship. In some states, you and your spouse can choose to co-own property as community property. The surviving spouse owns the entire property upon their partner’s death if you take title this way.

Owning property via these methods means the property will automatically belong to the other owners when you die. Before you decide how to take title to a property, you should consider talking to a lawyer about the implications of your decision on your ability to sell or transfer your interest in the property either during your life or after your death.

Some financial accounts have pay-on-death clauses. You can specify that the assets in these accounts should automatically transfer to a designated person. For example, your bank account or retirement account may have a pay-on-death clause. If it does, you only need to list a beneficiary on your account forms and the assets in the account will transfer automatically to that chosen person without having to go through the probate process.

The best way to avoid probate will vary depending on the asset, your own goals for managing the property, and the needs of your beneficiaries. It’s best to get legal help from an experienced estate planning lawyer to assist you with identifying the best tools to use.

After all, if you die and it turns out you didn’t do things correctly, it will likely be too late to spare your family from the stress and cost of court proceedings to settle your estate. A qualified legal professional will make sure these types of errors don’t happen to you and interfere with your ability to leave your desired legacy.