Probate takes time, involves court filings and creates additional work for your loved ones after you die. It’s understandable why some people wonder whether they can avoid probate altogether.
Fortunately, some assets can pass to your loved ones without going through probate. The key is knowing which assets are subject to probate and choosing the right estate-planning tools for your circumstances.
What is probate?
Probate is the legal process of managing a person’s estate after their death. It involves identifying and valuing assets, paying final expenses and creditors, filing final taxes and distributing the remaining assets to heirs or beneficiaries. Depending on the size and complexity of the estate, probate can take several months until the final report is filed.
Several estate-planning strategies are available to allow particular assets to pass outside probate:
- A revocable living trust, which allows you to transfer ownership of certain assets to the trust while you’re alive. You continue to manage those assets during your lifetime, and after your death, the successor trustee distributes the property according to the trust’s specifications.
- Joint ownership with rights of survivorship is often used with financial accounts. When one account holder dies, the funds pass to the surviving account holder rather than becoming part of the deceased person’s estate.
- Naming beneficiaries on insurance policies, retirement plans and other investments allows the funds to bypass probate and be paid directly to them.
- Payable-on-death accounts are different from joint ownership accounts. During your lifetime, you typically retain control of the money. After your death, the designated beneficiary receives the funds according to the account’s terms.
Lawmakers have proposed a transfer-on-death deed law for real estate, but it hasn’t passed. As a result, transfer-on-death is still not an option for Kentucky residents looking to bypass probate.
No one-size-fits-all strategy exists for avoiding probate. Therefore, working with a legal professional is essential to creating an estate plan that fits your circumstances.