Probate is a time-consuming process that can tie up your property for months and disclose the contents of your estate in public records. It can also be quite expensive due to court costs and attorney fees. If your heirs require access to your property shortly after your death, you have several options to ensure the property is kept out of probate.
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A living trust is a legal entity that allows you to keep assets out of probate but lets you use the property during your lifetime. With a living trust, you would generally be a beneficiary and the first trustee, but have a successor trustee named who takes over when you die. You draft a trust agreement, typically transferring the property to yourself in your role as trustee, using the appropriate deeds or paperwork. Then you and any future trustees manage and distribute the trust property according to the standards established in the trust agreement.
Right of Survivorship
Under a joint tenancy with a right of survivorship, the last living member of a group of co-owners automatically gets ownership of the property; the estates of the other co-owners who predecease the last co-owner have no rights to the property. In many states, spouses own their real estate in this way. When you die, your spouse automatically becomes the owner of the real estate and there is no need for your home to pass through probate.
Payable-on-Death Bank Accounts
A payable-on-death bank account works like a normal bank account; you have full access to the funds contained in the account and no one else can use it. However, you name a beneficiary who, once you die, gets the cash in the account without having to go through probate. To create a P.O.D. account, contact your bank about the process. You will generally be asked to fill out a form identifying the beneficiary. Then, when you pass away, the beneficiary must go to the bank with identification and proof of your death to gain access to the funds.
Property that you co-own with your spouse will generally go to the surviving spouse. This includes any joint bank accounts, cars and property that has your spouse listed as a co-owner. Only property that is solely listed in your name will go through probate. Prior to your death, ensure the assets you want to go to your spouse are listed in both of your names as co-owners.