What’s the Big Deal about Probate Avoidance?
Written By: The American Academy of Estate Planning Attorneys
How Do I Avoid Probate?
Now that you know why avoiding probate is such a common goal, here are some strategies you can use to help your estate avoid probate.
- Non-probate assets – Not all assets must go through the probate process. Assets that bypass probate are, therefore, immediately available to be passed down to the intended beneficiary. Along with trust assets (discussed later), some common non-probate assets include certain types of jointly owned property, life insurance proceeds, and funds held in an account designated as “payable on death (POD)” or “transfer on death (TOD).”
- Testamentary Trust – This is a common tool used by parents with minor children as a way to manage and protect the children’s inheritance until they reach the age of majority. A Testamentary Trust is drafted while the creator is alive; however, it is activated by a provision in the Will upon the Testator’s death.
- Pour Over Will – A Pour Over Will is frequently used in conjunction with a Trust to ensure no assets are left out of the Trust at the time of the Testator’s death. As the name implies, a Pour Over Will simply directs that any assets remaining in the Testator’s estate at the time of death are to be “poured over” into an existing Trust. This might include assets acquired right before the Testator’s death, personal property that was not transferred into the Trust already, or other overlooked assets.
- Revocable Living Trust – A Revocable Living Trust is created and activated during lifetime. As the Settlor (creator) of the Trust, you have the ability to name yourself as the Trustee of the Trust and name someone close to you as the successor Trustee. Major assets are transferred into the Trust; however, you continue to control and manage those assets as the Trustee. Because the Trust is revocable, you have the ability to transfer assets in and out of the Trust with ease. A Revocable Living Trust not only avoids probate, but it also makes an excellent incapacity planning tool because your successor Trustee will take over automatically in the event of your incapacity during your lifetime.
If probate avoidance sounds like an estate planning goal you wish to pursue, schedule an appointment to discuss your options with your estate planning attorney.