When a person passes away, their property must typically pass through probate. Probate is the process the state uses to legally assign a person’s property to their beneficiaries, and it can take many months to complete. In some cases, the legal and maintenance costs of the process drains value out of the property, so it is wise to plan ahead to protect assets you want to pass along to others.
Depending on the nature of your property and the way you wish to distribute it, you may use several different legal tools to avoid the probate process, at least partially. By building a strong legal plan for your property, you can help ensure that your legacy lives on and your property goes to the people or organizations that you value.
Planning around probate
In broad strokes, probate typically applies to most of the property that a person owns when they pass away. If a person creates a will beforehand, probate typically follows the distribution laid out in the will. Unfortunately, this takes time and incurs frustrating legal costs.
If you have property you want to give to someone or some organization, there are ways to remove it from your sole ownership while maintaining some degree of access or control over the property.
For instance, you may have a piece of real estate that you wish to leave to your spouse without it passing through probate. You may be able to use “joint property ownership,” which adds another owner. When one of you passes away, the other automatically assumes ownership.
Similarly, some assets and accounts may transfer directly to a beneficiary if you establish them as “payable on death.” This creates a death beneficiary, and avoids the probate process.
Some assets are more complicated, but you may be able to place them in a revokable living trust. A revocable living trust allows you to place property in a trust and allow others to use it, while retaining your right to dissolve the trust at any time. If you pass away while the property is held in the trust, it typically does not pass through probate.
Lastly, you can always take advantage of tax-free gifting. As long as you do not exceed the gift allowance for an individual within a given year, you may give freely to others and direct your property this way, without incurring extra fees.
Protect your future
However you choose to distribute your property, you should have a strong legal strategy to protect yourself. With careful planning, you can ensure that your rights remain secure while your legacy lives on.