People often share with me their fear or dislike of probate- much of the time because they have watched a friend or family member get caught in a long and frustrating probate administration. (For more about probate, see our Probate FAQs.)
Now, I should probably point out up front that I think a trust is the best way to avoid probate. (See "What's the Difference Between a Will and a Trust?".) But that’s not the only way, and I’d like to tell you about some others you can do yourself. *
One of the benefits of avoiding probate is that your beneficiaries have quicker access to the assets you leave them. The probate-avoidance strategies below are the most common. (But be careful- they can’t be changed by will, so you have to be sure.)
1: Update your beneficiary designations.
If you have life insurance policies or retirement accounts such as pensions, 401(k)s, and IRAs, you most likely named beneficiaries to receive those assets when you die. Beneficiary designations are a great way of avoiding probate; those assets will almost immediately be paid out or transferred to the person or persons you’ve named, without any court involvement. But be careful: beneficiary designations can’t be changed in a will, so make sure the people you’ve named are the ones you still want to receive those assets. (Not updating your beneficiaries can lead to unfortunate results.)
2: Transfer-on-death designations.
Transfer-on-death provisions are similar to beneficiary designations, and are often used on bank accounts and other financial instruments. If you have a transfer-on-death provision on your checking account, for example, the person you designate to receive the account can get the account transferred to their ownership after your death by presenting identification and a death certificate. It works very much like a beneficiary designation.
3: Joint ownership with rights of survivorship.
If you co-own assets with rights of survivorship, your co-owner will become the sole owner on your death. (The joint ownership has to come with rights of survivorship; otherwise your portion will pass through your estate.) Be careful with this one- it seems obvious, but once someone is a joint owner of one of your assets, it’s theirs. If it’s a bank account, they can drain it. If they have money problems, the asset is open to their creditors. If their marriage is unstable, the asset will be available to be divided in their divorce. Joint ownership with rights of survivorship is commonly used
4: Funding your trust.
This may seem obvious, but many of my probate estates are opened to take care of assets that were never moved into a trust. If you already have a trust, take the time to make sure that your assets are titled in the trust. If you aren’t sure how, call a lawyer to get some help.
* Disclaimer: What you should do is always going to depend on your particular goals, assets, and family situation. While the strategies listed above will help your assets avoid probate, there are downsides to each and these solutions may not be right for you. (And if you really love disclaimers, there are more on the Site Disclaimer page.)