You’ve likely heard that probate is a process to avoid if at all possible. Probate is a legal proceeding used to distribute your assets after you die. It is a long and tedious process that can be incredibly stressful on your heirs. It can take as little as three months or be drawn out up to three years. Putting some time into your estate planning before you pass away can help ensure your loved ones don’t have to go through probate to close your estate.
Most people assume that having a will is enough to avoid probate. This is not the case. Any assets titled individually that you own and would like to pass on to someone are subject to probate.
Here are five steps you can take to avoid probate:
1. Give away your property
It’s as simple as it sounds, give away your assets. The federal government taxes estates that are larger than $11.58 million (in 2020). If your estate is larger than this, you should give away enough assets ahead of time to reduce your estate and avoid this tax. Also, if you give away assets while you are still living, they won’t go through probate when you die.
Beware though, there are potential tax consequences and gift limitations. Consult a legal expert to structure your gifts.
2. Draft a living trust
Creating a living trust to hold your assets is a smart estate-planning tactic. Assets within your trust will not be subject to the probate process after you die. You name a trustee to distribute the assets of your trust according to the terms of the trust agreement you created. Not only does this avoid probate, but a trust also allows you to create detailed instructions when your trustee distributes your assets.
You will need to work with an attorney to set up a trust. Living trusts do cost more to create than a simple will. However, the costs saved by avoiding probate will likely more than offset the cost to establish a trust.
3. Convert all accounts to pay-on-death accounts
A step that is often overlooked, but so easy to do. Contact the financial institutions where your accounts are held and request a form to add a pay-on-death beneficiary. Accounts with beneficiaries pay directly to the beneficiary at the death of the owner without going through probate. Many states also allow pay-on-death beneficiaries to be added to security and vehicle registrations. This is truly the easiest way to pass assets on to your heirs.
4. Establish joint ownership
Most property owned jointly passes automatically to the surviving owner upon one joint owner’s death. You can also add a joint owner to most property (real estate, cars, boats, financial accounts, and securities). This is an easy way to avoid probate without a lot of extra work.
There are three ways to own property jointly:
- Joint tenancy with rights of survivorship
- Tenancy by entirety (not available in Georgia)
- Community property with rights of survivorship (not available in Georgia)
- Tenants in Common (property owned this way does not pass without probate)
A probate attorney will be able to direct you to which type of joint ownership will be best for your assets and properties.
5. Use small estate laws to your advantage
It may surprise you that a “small” estate is actually quite large. Probate limits vary state-by-state, but most states have an exemption level for probate. Georgia’s limit is $15,000 and in Georgia, the law only applies to bank accounts. This will allow for a more simplified, streamlined probate process if you have to go through with it.
The attorneys at Smith Barid are experts in estate planning and are here to help you with all of your estate planning needs, especially avoiding probate. Conveniently located in the Savanah, GA area, please contact us today.