When a person dies, the estate typically goes through a legal process that pays the deceased’s debts and distributes his or her assets. However, if a will or estate plan is not available, your estate is subject to state law, which may not handle your estate the way you hoped.
In addition, the probate process is costly. Your heirs may pay filing, attorney’s and other fees. Therefore, these are some ways you can set up your estate to reduce or avoid probate.
Co-ownership of property
When you have someone else on your property deeds, that person automatically receives the property when you die. In some cases, spouses can receive property automatically, but you need to clarify that the property falls under survivorship rights.
You can also transfer your property to another person before you die. In this case, you will sign your real estate over to your heirs. However, the new owners can limit or eliminate your use of the property.
You can invoke a transfer-on-death or pay-on-death designation for your vehicles, real estate and financial and retirement accounts. Your heirs will have no access to or authority over these accounts until you die.
If you want your heirs to avoid probate completely, consider a revocable living trust. This places all your assets into a trust that collects the title to all your assets. You are a trustee, and you have complete control over all the property in your trust. Your appointed successor then distributes your assets based on your desires when you die.
The easiest way to minimize your heirs’ probate costs is to create a will. Even if you have a trust, you should have a will because you cannot put everything you own in a trust.