Probate is the public and court-supervised process of administering a person’s estate. Going through probate isn’t the end of the world, but it can be complicated and more costly. There are a few ways to ensure that your estate plan avoids the probate process.
Simplified Probate. If an estate is small and there are no claims from creditors, the personal representative of the estate can petition the court for simplified probate. In Minnesota, it may be possible for heirs of an estate to use an affidavit to make their claim if the value of the estate is less than $50,000. This process can eliminate the need for probate or significantly shorten the probate process.
If your estate is larger there are a variety of other strategies and tools that we can use to avoid probate:
Trusts. One common option is a revocable living trust. The person creating the trust (“settlor”) appoints a trustee who will distribute the property in the trust to beneficiaries after the settlor has passed. Any asset you own can be put into the trust: bank accounts, real estate, vehicles, personal property, and more. When you put property into a living trust you transfer ownership to yourself as trustee during life. During the administration of your estate, the appointed trustee will transfer the property to the beneficiaries you selected. These types of trusts are popular because they allow the settlor to retain powers over the property in the trust during life. Trusts provide privacy and reduce the chance that someone will dispute your estate.
Creating a basic revocable living trust is not much more complicated than creating a will, and the cost-saving benefits in administration can be substantial. However, you cannot name guardians for children in a trust, or instruct how debts and taxes will be paid.
Joint Ownership. Many married couples own their home jointly with a right of survivorship. Upon the death of one of the joint owners, the other owner automatically owns the property in full. Joint tenancy also can apply to assets like vehicles, bank accounts, and other property interests. This is one simple way to title property, especially with a spouse or significant other, which automatically transfers upon death without the need for probate.
Payable-on-death and transfer-on-death designations. Many types of assets and accounts allow the owner to select a payable- or transfer-on-death designation to avoid the need for probate or other measures of transferring property. Checking accounts, savings accounts, certificates of deposit, and other bank accounts can be designated payable-on-death so the owner has full and exclusive control during life, and a beneficiary can claim the assets without probate proceedings. You can also assign a transfer-on-death designation to stocks and bonds and real estate. Title and rights to the account or property will transfer to the named beneficiary automatically.
Contact Geisler Law today to start planning for your estate to avoid probate!