Probate is the administration of an estate. It is the formal, court-monitored process that results in the distribution of the estate assets to the appropriate beneficiaries. Probate, while sometimes necessary, is a notoriously lengthy, complicated, and sometimes expensive process. Fortunately, through proper estate planning, you can spare your loved ones the trying experience as they watch your estate go through probate. You have the ability to design an estate plan that can mostly, if not completely, eliminate the need for your estate to go through probate.
How Can I Avoid Probate?
There are several ways you can structure your estate so that the bulk or all of your assets pass outside of the probate process. You can avoid the probate of your assets through the use of:
- Living trusts: Assets held in a living trust will pass outside of probate. To properly establish a trust for this purpose, careful attention must be paid to how the trust is funded. Ownership of the asset must be transferred from the trust creator to the trust. If there is an asset held in the trust that has the trust creator listed as the owner at the time of the trust creator’s death, it will be subject to probate proceedings. The trustee of the trust will distribute the trust property according to the instructions laid out for the trust upon the passing of the trust creator.
- Joint tenants with rights of survivorship: Property held as joint tenants with rights of survivorship will pass outside of probate. When a co-owner of this type of property passes away, his or her property rights will automatically transfer to the surviving owners. In order to establish a property as being owned by joint tenants with rights of survivorship, the deed to the property must explicitly state that the property owners take an equal and undivided share in the property subject to rights of survivorship.
- Tenancy by the entirety: Just as with joint tenants with rights of survivorship, property held as a tenancy by the entirety will pass outside of probate as well. When a co-owner passes away, his or her property interest will pass to the surviving property co-owner. Tenancy by the entirety of property can only be held by spouses. The deed must state that the property is being held in this way.
- Accounts with named beneficiaries: Financial assets such as life insurance, IRAs, and employer retirement accounts can avoid probate when a beneficiary to the account is named. Upon the death of the account holder, the asset will transfer to the listed beneficiary.
- Pay on death accounts: Accounts that have a pay on death or transfer on death designation will also pass outside of probate to the listed individual. This is generally available for things such as bank accounts and securities.
Estate Planning You Can Count On
At M&A Law Firm, P.C., we design individualized, comprehensive estate plans for you and your family. Design a future for your loved ones that will bring you peace of mind far into the future. Contact M&A Law Firm, P.C. today. We proudly serve Cook County and Schaumburg, Illinois.