By Robert Friedman

Are you concerned about the lengthy and financially burdensome probate process? Probate court proceedings can be cumbersome, often taking months or even years to resolve, adding stress to an already difficult time for family members. However, there are effective strategies to bypass probate and ensure a smoother transition of assets upon death.

HOW SOLELY OWNED ASSETS ARE DISTRIBUTED AFTER DEATH
Assets held solely in your name, without designated beneficiaries or joint owners, will be distributed
through one of the following legal processes:

Probate

If you have a valid Will or Codicil, your estate will be administered by an Executor appointed by the court

Intestacy

If you do not have a Will, your estate will be managed by an Administrator. In this case, state law determines who inherits your assets. These heirs, known as “distributees,” are assigned as follows:

• If you have children but no spouse, your children inherit everything.
• If you have living parents but no spouse or children, your parents
  inherit everything.
• If you have siblings but no spouse, children, or parents, your siblings
  inherit everything.

ROLE OF SURROGATE’S AND PROBATE COURTS
These courts oversee:

• The probate and validation of Wills.
• The appointment of Executors to manage
  estates with a valid Will.
• The appointment of Administrators for estates of
  individuals who die without a valid Will.
• Resolving disputes related to the validity of a
  Will or the administration of an estate.
  
• THE PROBATE PROCESS: FILING, NOTIFICATION, AND APPOINTMENT OF THE EXECUTOR
  Probating a Will is the first step in any estate administration. The Executor must locate the
  original Will to file with the court along with the Will witnesses’ affidavits, notices of probate, and the petition for probate. State laws require that all beneficiaries and fiduciaries named in a Will, as well as all of the distributees, be notified that the Will is being submitted to probate. Distributees and any person who would be adversely affected by the probate of the Will are given an opportunity to appear in Court to object if they do not sign a waiver indicating consent to probate. If no one has any objection to the Will and the court believes that the Will is valid, it will be admitted to probate and the person named therein will be appointed as Executor. Recognizing that probate can be expensive and time-consuming, each state provides ways for a small estate to be distributed without going through the full probate process if there is no real estate. The size of the estate or the types of assets
  determine which procedure should be followed.

AVOID PROBATE WITH THESE FORMS OF OWNERSHIP
The following assets do not pass through probate or estate administration. Instead, the proceeds go directly to the person named as beneficiary or joint owner of that account.
Utilizing these ownership structures can streamline the distribution of your estate and provide financial benefits to your heirs. The following forms of ownership avoid probate:

1. Real Estate held as Joint Tenants with the Right of
   Survivorship.
2. Tenants-by-the-Entirety (spouses).
3. Transfer on Death Deed automatically transfers real
   estate upon death to the named beneficiary.
4. Life Insurance unless all beneficiaries are deceased.
5. An irrevocable or revocable intervivos trust (living trust)
   is created for holding ownership of your assets during
   your lifetime for the benefit of named beneficiaries and
   distributing and/or managing those assets after your
   death. The trust consists of the creator (also known as
   the grantor), trustee, and beneficiary.
6. Corporation stock jointly owned.
7. LLC member units jointly owned.
8. Lifetime Gifts: Sign a power of attorney authorizing your
   agent to make gifts during your lifetime if you are unable
   to do so. With the annual federal gift tax exclusions, you
   can make annual gifts without tax consequences. Giving
   away assets will appreciate in value, such as real estate,
   utilizes your exemptions and shifts the appreciation in
   value to the next generation.
9. Uniform Transfer to Minors Act (UTMA) custodial
   accounts transfer assets to minors without probate.
10. U.S. Savings Bonds with payable on death beneficiaries
    or joint ownership.
11. IRAs/401(k)s: Direct beneficiaries avoid probate.
12. Investment Accounts designated as Transfer on Death.
13. Bank Accounts Joint designated as Payable on Death,
    Transfer on Death, and in Trust.
14. Annuities.
15. Life Estate.
16. Automobiles: Some states allow family members to
    transfer vehicles up to a certain value directly through
    the DMV.

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BENEFITS OF AVOIDING PROBATE

• Saves time and costs by reducing court fees
  and delays
• Maintains privacy.
• Avoids Will contests reducing the likelihood of
  legal challenges to the estate.
• No Medicaid recovery.
• Avoids the need for ancillary probate if real
  estate is owned in other states.
• Preserves your assets from nursing home costs.

RISKS OF AVOIDING PROBATE

• Not funding your living trust.
• Not coordinating your non-probate asset
  distribution with your Will.
• Joint owners can be sued, file for
  bankruptcy, or have an account
  compromised by divorce.
• Ancillary Probate: This is necessary if you
  own real estate in other states.
• Loss of capital gains exemptions.

CONCLUSION
Avoiding probate can significantly benefit your estate and heirs, offering privacy, efficiency, and financial savings. However, it requires careful planning and coordination to avoid potential risks. By consulting with legal and financial professionals, you can develop a comprehensive estate plan that balances probate and non-probate strategies, ensuring a smooth and secure transfer of your assets.

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