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Strategies to Avoid Probate

Nov. 16, 2017

The most frequently cited reason for having a will is that it ensures that upon your death, your real estate and personal property will be passed on to the persons you choose. That is certainly one good reason, but there may be others that apply to you. A consultation with an experienced estate planning attorney will help you weigh the relative benefits and costs of having a will (in which case you will die “testate”).

The most common justification for not having a will is that it avoids the time-consuming and expensive process of probate. That is true, but it’s if you die without a will and have not made other arrangements for distributing your property, it may take as long or longer and cost just as much to settle your estate.

What I want to talk briefly about here are some of those “other arrangements” – ways that may ensure that upon your death your property will go to the persons you intend.

Living Trusts

A properly structured living (or “ínter vivos”) trust has is one alternative. The grantor creates the trust and transfers property into it. The trustee is responsible for managing the trust during the grantor’s lifetime, and the beneficiary – usually the grantor – receives the benefit (for example, dividends or interest) of the property. On the grantor’s death, the property passes to one or more named persons.

While a living trust can be a valuable estate planning tool, it is unwise to create a trust using documents from a “self-help” website or book. An experienced lawyer can help ensure that the trust documents satisfy legal standards and consider the client’s particular circumstances.

Name a Beneficiary

If an insurance policy, retirement account, or annuity fails to name a beneficiary, upon the holder’s death the proceeds will ordinarily become part of his or her estate. This can be easily avoided by confirming that the documents for all such investments include a specific beneficiary designation.

Jointly Owned Property

While common among married couples, joint ownership may exist between any two or more persons in most real or personal property. With few exceptions, a jointly owned property is considered to be held with the “right of survivorship”, which automatically passes a deceased owner’s rights in the property to the surviving owners.

Payable (or Transferable) On Death (POD/TOD) Bank Accounts

To create a “TOD” or “POD” checking or savings account, the owner completes a form with the bank that holds the account, designating the person who is to succeed to the owner’s rights upon his or her death. The owner may change the designation at any time.

Small Bank Account Balances

Under Pennsylvania law, if an individual owns a bank account with a date-of-death balance of more than $10,000, estate administration (whether or not there was a will) will be required. However, smaller balances can be paid out directly to certain surviving relatives. Clients who hold most property jointly or in another form that will pass outside of probate are thus well advised to keep the balance of anyone bank account at or below the is the threshold.

NOTE: This is for informational purposes only and does not constitute legal advice.