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Bypassing Probate: Three Effective Methods

23 September 2015 by Kenneth Pierce

If you plan to leave a sizable amount of assets to your beneficiaries after you pass away, it's usually a good idea to avoid probate. The process is often complicated and lengthy and you don't want to make the heirs wait for their inheritance any longer than necessary. It's fairly well-known that you can avoid probate by creating a living trust, but some simpler methods are available as well. This article examines three interesting options.  

Gift  

One way to avoid probate is to give the relevant assets to your heir or heirs while you are still living. Although some people have concerns about federal taxes on gifts, in many cases you will not have to pay any federal tax at all. This is because the rules allow you to give a beneficiary a gift valued at up to $14,000 each year without owing any tax. Also, any gift you give to your spouse is generally exempt from federal taxes.   

Bank Account 

Bank accounts are often subject to probate, but there is a fairly simple method for keeping your account out of probate. Called a Payable on Death, or POD account, these accounts are easy to set up. You just go to your bank and give the name of the intended beneficiary to them. Once the proper forms have been filled out, the beneficiary will only need to present a death certificate and proof of his or her identity to the bank after your death. The assets in the account will be transferred to them immediately and they will not have go through a lengthy probate process.   

Real Estate 

Another asset that frequently ends up going through probate is real estate. A number of states, however, allow you to bypass probate through a special type of deed, known as a Transfer-on Death, or TOD, deed. To create a TOD, you need to name a beneficiary, sign the deed and file it with a clerk at your local land records office. You do not have to worry about changing your mind with a TOD. If you decide that you want to name a different beneficiary at a later date, you are free to do so. 

You have several good way to avoid probate, but because the issue is rather complex, it's best to have expert legal advice before proceeding. For more information on this topic, consult an experienced probate attorney in your area. 

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