Probate = the Latin word for proving, which means that the estate probate process is the process by which your will is brought before a court to determine that it is a valid will. The courts charged with this responsibility are generally known as probate courts, which may supervise the administration or settlement of your estate.
Supervision of the estate settlement process by the probate court can result in additional expense, unwanted publicity and delays of a year or more before heirs receive their inheritance. The public hearings, delays, and cost of probate motivate many people to explore ways in which to avoid or minimize the impact of probating a will, including:
- Many states have made provision for certain estates to be administered without the supervision of the probate court, resulting in less cost and a speedier distribution to heirs. Assuming they meet the specific legal requirements.
A form of Property Ownership
- The joint tenancy form of holding title to property allows ownership to pass automatically to the surviving joint tenant, who is usually the surviving spouse.
Transfer on Death
- Many states have enacted Transfer on Death statutes that allow a person to name a successor owner at death on the property title certificate for certain types of property, including real estate, savings accounts, and securities.
- Unless payable to the estate, life insurance proceeds are rarely subject to the probate process.
- Gifts are given during life avoid the probate process, even if made shortly before death.
- A “Totten” trust, which is a bank savings account held in trust for a named individual, can be used to pass estate assets at death outside of the probate process.
- A revocable living trust, created during the estate owner’s lifetime, can be an effective way to avoid the expense and delay of probate while retaining the estate owner’s control of his or her assets before death.
Proper planning may serve to minimize the impact of the probate process on your estate and heirs.
Any potential method of avoiding probate, however, should be evaluated regarding its income and tax consequences, as well as its potential impact on the estate owner’s overall estate planning goals and objectives.