Estate Planning Tips

Many estate planners organize their estates so that their heirs can skip the probate process. While there is no way to guarantee that your estate will not end up in probate, there are some specific probate avoidance strategies one can employ to render the process extremely unlikely. These involve the use of revocable living trusts, joint tenancy arrangements and naming specific beneficiaries on your financial accounts.

Revocable Living Trusts

A revocable living trust is the most frequently used estate planning tool for probate avoidance. In a revocable living trust, the person who creates the trust is referred to as the "grantor." The grantor is the living owner of the trust, who transfers his or her property to be under the ownership of the trust. The benefit is that the grantor of a revocable living trust will be named trustee, and he or she will remain in control of the assets inside the trust, until the moment of his or her passing. After death, a previously named successor trustee will assume control of the trust and distribute its assets to the trust's beneficiaries. This is all achieved without the need for probate proceedings.

Joint Tenancy

Another less complete way of avoiding probate with regard to specific property items is called joint tenancy. With joint tenancy, an individual can share ownership of a specific piece of property, such as the family home, with another individual. Upon death of either of the joint owners, the other joint tenant will automatically assume ownership and control of the property and probate proceedings will not be necessary for that specific piece of property.

Naming Beneficiaries

Another area where probate proceedings are not needed is with regard to specific kinds of investment accounts like 401(k)s and Individual Retirement Accounts. These and other types of financial accounts have beneficiary documentation attached to them. When a specific beneficiary or beneficiaries are named on this paperwork, it bypasses the need for probate with regard to the assets in those accounts. The beneficiary paperwork even supersedes anything that is mentioned in one's will, so it is vital that it does not conflict with the will, or family disagreements could result after one's death.

While there are no foolproof strategies to prevent probate, and even the best organized estate plans can end up in probate court if a will or trust is challenged following one's passing, the above are several strategies that are commonly employed.