While creating a Living Trust is probably the most common way to avoid probate, there are other circumstances in which Probate can be avoided, delays, or minimized.
Revocable Living Trust
The reason for establishing the Living Trust was to give people the opportunity to by-pass probate. The benefit of keeping your valuable asset in the trust is that the asset isn’t associated with the probate estate after your death. However, it’s considered a part of your estate for federal estate tax functions. This is due to the fact that a trustee (and not an actual person) is the owner of the trust asset. Therefore, your assets can be easily handed over to your loved one; who it was intended for by the trustee after your death, and as such, avoiding probate. The trust document (just like a will) is specified by you; on who the property should be given to.
Pay-on-Death Accounts and Registrations
Your bank and retirements account can be converted into payable-on-death accounts. This is done by filling a form where the beneficiary will be enlisted. The finances are then passed straight to the beneficiary when you die. The same process can be done for security registration and even vehicle registration (depending on the state). Several states permit transfer-on-death real estate legal documents; which permits the transfer of an asset with a legal document that isn’t effective till you’re dead.
Joint Ownership of an Asset
There are various kinds of Joint Ownership that offers an easy method of preventing probate after the death of the original owner. In transferring asset in a way that will prevent probate, you write, on the document that indicates your ownership, the ways you want the title to be held. There’s usually no extra document required. After the death of one of the owners, the asset is passed directly to the joint-owner – without probate.
Probate can be avoided when you own property in the following ways.
Joint Tenancy with the Right of Survivorship
With Joint Tenancy, assets are automatically transferred to the surviving owners after the death of the original owner, without probate.
Tenancy by the Entirety
In several states, couples usually take title in “Tenancy by the entirety” instead of Joint Tenancy. This is almost the same as the Joint Tenancy, however, only married couples can make use of it (or with registered gay partners in the state). These two processes avoid probate in the same manner.
Community Property with Right of Survivorship
If you are married in California (or registered as domestic partners with the state), and you reside or own an asset in Arizona, Alaska, California, Nevada, Idaho, Wisconsin or Texas, the Community Property with Right of Survivorship is another method of owning an asset with your partner. An asset that’s owned this way will automatically be passed to the spouse when the other dies.
Handing properties over to others as gifts while you’re alive is a simply way of avoiding probate because if it’s not yours when you’re dead, it can’t pass through probate. That reduces probate cost because the general law is; the more monetary value of an asset that passes through probate, the more expensive it becomes. Also, most gifts don’t go through the federal gift tax.
Simplified Measures for Small Estates
Most of the states recently provides alternatives through probate – or completely avoid it – for “Small Estates.”