How Do I Keep My Property Out of Probate?
by Unbundled Legal Help
If you’re worried about how your property will be distributed after your passing, you’re not alone. Each month thousands of people search for phrases like, “How do I keep my property out of probate?” They want to ensure that their assets get to the right people and keep their costs and stress levels as low as possible.
There are many ways to keep property out of probate. One of the most common methods is by creating a living trust. Other ways include:
- Giving your property away
- Creating pay-on-death financial accounts
- Designating transfer-on-death beneficiaries
- Establishing jointly owned accounts
- Giving your property away
There are other ways to keep your property out of probate. What works best for you will depend on your estate’s size, who you intend to give your property to, and some other factors.
We can connect you with a local, unbundled estate and probate lawyer who will simplify the process and ensure your wishes are carried out per your instructions.
Learn more about how to keep your property out of probate below.
What is Probate?
Probate is a legal process carried out by the courts after a person passes away. It ensures a deceased individual’s property is distributed to the right people, and that all debts and taxes are paid. Also, when there is a will in place, the probate judge checks to be sure it is valid, and the directions in the will are followed.
The probate court doesn’t undertake this task by itself. Typically, there is an executor or personal representative who oversees the probate process even when there is no will in place. While probate is necessary in most cases, there are ways for certain property and assets to avoid the probate process.
Common Ways to Avoid Probate
As mentioned above, there are multiple ways to avoid probate. Your job is to understand what methods are most beneficial based on your current finances and your beneficiaries when you pass away. Check out a few methods people use to avoid the probate process.
Write a Living Trust
The easiest way to avoid probate is to create a living trust. This document is similar to a will but has important differences. Instead of distributing your assets upon death, a living trust places your assets “in trust.” The trust then owns that property and is managed by a trustee.
By taking this route, the property placed into the trust can avoid the probate process since technically you don’t own the property. Another benefit of trusts is so that your beneficiaries or your estate doesn’t have to pay probate fees and court costs, which can be as much as ten percent of your estate’s worth.
Name Beneficiaries on Financial Accounts
For some people, creating a living trust is not worth the hassle, time, or money. While they may decide to make a will instead, this doesn’t mean that all of their property has to go through probate.
They can name beneficiaries on their financial accounts such as bank accounts, retirement accounts, stocks, bonds, IRA accounts, etc. They can designate a beneficiary to immediately receive their funds from the account when they pass away.
These are also called “payable on death” accounts. Naming payable on death beneficiaries helps ensure the funds in these accounts don’t go through probate.
Create Transfer-On-Death Financial Accounts
Transfer-on-death (TOD) designations can be used for securities, motor vehicles, and real estate. It’s similar to payable-on-death designations. However, TODs typically involve additional requirements and rules. Each state has laws concerning TOD designations, so it will help to consult with your estate planning lawyer before naming beneficiaries.
Jointly Owned Property
Another popular method for keeping property out of probate is to establish joint ownership. If you are married, your property may already be jointly owned, depending on the state where you live. Jointly held property usually goes to the surviving owner once the other passes away.
Since your jointly owned property is automatically transferred upon death, it does not have to go through the probate process.
Give Away Property
Giving away property is a surefire way to keep it out of probate. While you may not be able to give away all of your property before you die, you can certainly give away some and keep the rest to live on. You can also include gifts in your estate plan.
It’s important to note that when you gift property, you no longer have use of it. Also, when gifts exceed a certain value, they can incur gift taxes, so it’s advisable to discuss your gift-giving with a proven estate planning lawyer.
Benefit from Advantages Available to Small Estates
If your estate is below a specific value set by your state, it may qualify for simplified probate procedures. This process can include certain types of property left to a surviving spouse. Figuring out which advantages your estate is eligible for can be a tricky process without a professional’s help.
Does a Will Keep Property Out of Probate?
No, a will doesn’t keep property out of probate. On the contrary, a will is an integral part of the probate process and can potentially minimize costs and stress for your beneficiaries and family. A will is the cornerstone of any estate plan. Even if you decide to create a trust, create POD or TOD accounts, give away property, etc., there will likely still be a need for a will.
What Assets Will Avoid Probate?
Probate assets typically include anything that is only titled in the deceased name, are held jointly as tenants in common, and other items that don’t qualify to avoid probate. Property that is typically eligible to avoid probate includes
- Joint tenancy with rights of survivorship
- Tenancy by entirety
- Community property
- Property with a quitclaim deed
- Property with designated beneficiaries (TOD or POD)
- Property within a trust
- Life insurance and pensions
- Wages and commissions due to the deceased
Everyone’s situation is different. The exact property that will avoid probate depends on the state where you live, the type of property, and your estate’s value.
How Do I Keep My House Out of Probate?
If you are married, your home may already avoid probate due to community property or joint tenancy laws. However, exactly how these laws work and what is eligible depends on your state and other factors.
In some cases, you may be able to place your home in a revocable trust. However, it’s important to note that doing so can be complicated and carry certain consequences with it.
Some states like California allow transfer-on-death deeds that enable you to name beneficiaries to receive the property without going through the probate process.
Do Household Items Go Through Probate?
Generally, yes, household items must go through probate. Also, items without an explicit title are considered probate assets. Examples of probate household items include furniture, appliances, clothing, artwork, and jewelry.
If there are items you deem especially important, you can potentially include those in your living trust. This method is typically reserved for items with a higher value.
Can You Empty a House Before Probate?
It’s understandable for your family to desire to empty your home before the probate process. However, this is typically not allowed by law. In most cases, your family will need to wait until the conclusion of probate (which can take months) before they can empty your home.
This is true even when there is a will in place. Cases in which your house can be emptied immediately after death do occur if your home was placed in a trust, transferred, or owned jointly (in some states).
How Much Does an Estate Have to Be Worth to Go to Probate?
The exact answer to this question depends on your estate’s value and the state where you live. While all property eligible for probate must go through the probate process, there are simplified procedures for estates whose value is below a certain value.
For some states, that value is just a few thousand dollars. In others, it’s as much as $200,000. Check with your estate planning lawyer to learn more about the simplified probate process if you are unsure whether your estate qualifies.
Will Banks Release Money Without Probate?
How money banks hold in their accounts depends on how the deceased person owned them. If their accounts were designated payable-on-death, owned jointly, placed in a trust, or were included in the “rights of survivorship,” then those funds can be released without probate. However, there are exceptions to this rule, depending on where you live and other factors.
How to Stop an Estate’s Probate?
Usually, once the probate process begins, it can’t be stopped. However, in some cases, a “caveat” can be filed, which is a notice to the court to suspend the process. Caveats inform the courts about potential discrepancies in the probate process.
When filed, they stop probate while the matter is investigated. Family members, creditors, and anyone with an interest in the estate can file a caveat. It’s typically best to hire an attorney to complete this task. People or companies that file caveats are also called “caveators.” Reasons to file a caveat include:
- The caveator suspects a forged or absent signature from the deceased
- It’s suspected the will or transfer of assets was conducted under duress
- There is no will
- The deceased was mentally ill at the time the will was created
- There is a dispute about who is in the will or is left out of the will
Should Probate Be Avoided?
The probate process can be avoided, and for many, it’s in their best interest to do so. While it’s not always possible or feasible, making an effort to avoid probate can be beneficial to you and your beneficiaries. A few benefits to avoiding probate include:
- Beneficiaries’ access to immediate cash and assets
- Cutting the probate judge out of the picture and maintaining complete control
- Avoiding the costs and headaches of probate
- Keeping your affairs private (probates are a public record)
The steps to avoid probate vary state-to-state and depend on many factors. Consult with an estate, trusts, and will professional before taking steps to avoid probate.
Do I Need a Lawyer to Keep My Property Out of Probate?
If you have an in-depth understanding of estate and probate laws in your state as well as a strong grasp of your finances and property, then you may not need a lawyer. However, this is not the case for most people.
An estate planning lawyer helps ensure you are financially protected while alive, your property goes to the right people when you die, and your family benefits from your assets as much as possible upon your death.
How Can Unbundled Legal Services Help Your Case?
While hiring an estate planning lawyer is usually the best option, it’s not always the most cost-effective method. Most estate attorneys charge an upfront fee plus an hourly rate. Total costs easily exceed thousands of dollars, especially in states that allow lawyers to charge a percentage of the estate’s full value.
We work with lawyers who provide unbundled estate planning services. This means that you can save money by taking care of part of your estate planning needs on your own while you hire an attorney to take care of the rest.
Fees for unbundled legal services start as low as $500 - $1500. If your estate planning needs are more complex, our lawyers also offer full-service estate planning at an affordable rate.
Don’t let probate take away the assets that matter to you most. Get instantly connected with an unbundled estate planning lawyer, and learn if your case is a good fit to be unbundled today.