Four Ways to Keep Probate to a Minimum
Making a will is the traditional way of controlling what happens to your property when you die. A will must usually go through probate, a court proceeding that can be lengthy, complicated and expensive. However, not all of your assets need to be part of that process. Depending on how you manage your property, it may be possible to lessen or eliminate the probate burden for your heirs.
In Arizona, the smaller the value of your estate — the property that passes under your will — the simpler the probate process can be. Here are four ways that you can reduce the size of your estate and so keep probate to a minimum:
- Create a living trust — When property is held in a trust, it belongs to a separate legal entity, controlled by a trustee. You can transfer property to a trust that you create and name yourself as trustee, retaining full use of the property during your lifetime. Upon your death, the property passes to your designated successor trustee and is distributed to the named beneficiaries without the need for a court proceeding.
- Hold property jointly with right of survivorship — Property may be co-owned as a joint tenancy or, if the owners are married, as community property. In either form of joint ownership, the deed or other title document must specify that each co-owner has the right of survivorship, which means the property automatically passes to the surviving co-owner upon the death of the other. Otherwise, the deceased owner’s share goes to his or her estate.
- Invest in life insurance — One of the most valuable assets you can leave your loved ones is a life insurance policy. When the insured policy owner dies, the proceeds of the policy pass directly to the named beneficiaries without court involvement. However, be sure that you set up the policy so that the proceeds pass to your intended beneficiaries. This may require naming contingent beneficiaries to prevent a policy lapse if one or more primary beneficiaries die.
- Update the beneficiaries of your retirement funds — Retirement funds pass to named beneficiaries under the governing plan upon your death. It is important to make sure the company that manages your retirement funds has the beneficiaries’ names and contact information on file and that you update this information if your intentions change. If the funds cannot be distributed as directed in the plan, they will go to your estate and be subject to probate.
It’s never too early to consult with an experienced estate planning attorney who can advise you about steps you can take to reduce the amount of assets that must go through probate. With careful planning, you can accomplish your desired transfers of assets while making the estate administration process easier for your loved ones.