Understanding Probate

End of Life Management Toolkit #3 | by Team Passare and Robert L. Shepard

4. How-to Avoid Probate
  • Living trust: One common way to avoid probate is to create and fund a revocable living trust. We discuss trusts in eBook #7: Benefits of Forming a Trust.
  • Shift property ownership: Another common way to avoid probate is to shift property ownership. Real estate, bank accounts, and securities owned as joint tenancy with right of survivorship are not subject to probate when one owner dies and there is a surviving owner.
  • Trust or account: Bank, brokerage, and mutual fund accounts may include a pay-on-death or transfer-on-death designation; these are sometimes called an “in-trust-for account” by banks. Such property passes automatically to the named person without probate court supervision.
  • Hire an attorney: Although you may be able to avoid probate, the fees might not be avoidable. An attorney and/or accountant usually must be hired to help administer your trust or other non-probate estate and to prepare the estate tax return.

Helpful Hint for Understanding Probate: Remember that avoiding probate does not necessarily avoid estate taxes and the expense of preparing an estate tax return.

Now take a few minutes to answer these questions:
  1. How would creating a revocable living trust benefit your estate?
  2. What properties could you shift ownership of to avoid the cost and time delay of probate?
  3. Do you own bank, brokerage, and mutual fund accounts that you want to designate pay-on-death or transfer-on-death?
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