When putting together or considering an estate plan, the first assets you should consider are those that are subject to the probate process. These items likely have a title with only your name and no beneficiary. Some examples of such items are bank accounts, investments, homes, properties, vehicles and any other items with sole ownership. The reason these assets are subject to probate is that only a court has the power to remove your name from the title after you have passed. Fortunately, not every asset of your estate will need to go through a probate proceeding. There are at least three types of property that can avoid court title transfers.
Revocable Trust Assets
Assets tied into a trust can avoid the probate process. However, to ensure that the assets are free of court proceedings, it is essential to place them into a revocable living trust. The reason that items in a trust can avoid probate is that ownership resides with the trust and not the trust holder, meaning that ownership of an asset is given up to the trust. Unfortunately, if you place your assets in a testamentary trust, then they will have to go through probate before the trust can take effect.
Designated Beneficiaries
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Some assets can be named to a beneficiary. If you have such assets, then upon your death, these assets are transferred or paid directly to the named party. However, it is necessary to be extremely specific about beneficiary details. For example, don’t list your estate because then a probate court will need to figure out who your estate refers to. Also, if you name a minor, then a probate court may need to step in and determine a guardian.
Jointly Owned Assets
Another type of asset that can avoid the probate process is something that is jointly owned. Essentially, when there are two equal owners of an asset, that asset avoids probate and goes to the surviving owner. However, the laws surrounding joint ownership might be complicated depending on your state, and it is likely best to discuss specifics with an attorney.
When discussing your estate plans, the ultimate goal should be to avoid probate. Unfortunately, that is not always possible. However, you do have options when it comes to protecting your assets, even those without a beneficiary. Contact an experienced probate attorney and discuss your options regarding trusts, beneficiary designation and the laws surrounding jointly owned assets. Protect your estate and your final wishes by having an effective estate plan in place.
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