Making out a will is smart. It ensures that your spouse, children or appointed non-family heirs receive what you want to leave them. However, a lot of wills end up in probate, and that’s an issue because wills can get tied up in probate court for up to three years. The related legal fees of probate can decimate your assets to nothing worth leaving behind. Thankfully, there are ways around probate.
Have ZERO Debt
This sounds quite impossible, especially if you are married and have loans or credit cards in use. The biggest reason for probate is to provide your creditors notice that you have died and your assets are being passed to others. Creditors have the option to seek final restitution for unsettled debt, and they get that opportunity through probate court.
When you pass away and carry any debt, the will goes into probate. Creditors that hold your debts are notified of your deceased status. They can choose to file for full restitution of the debts you had with them.
At that point, the courts hold hearings for the creditors against the assets mentioned in your will. The judge may decide to liquidate some of those assets to settle some or all of that debt. The judge may also decide to leave the debt with your spouse if your spouse is still alive. It just depends on the state’s laws.
Ergo, the fastest way to avoid probate and/or get a will through probate court quickly is to carry no debt at all when you pass away. That isn’t easy to do, but if you and your spouse can manage it, it works out in your heirs’ favor.
Establish Living Trusts
Living trusts allow you to give your heirs the bulk of their inheritance while you are still alive. This may seem odd, but some people like the idea of being able to see what their heirs do with their inheritance and they like seeing their heirs enjoy what the heirs have inherited.
The added bonus is that the assets given away in living trusts cannot be taken, frozen or liquidated during probate. They are no longer part of your estate. They are part of your heirs’ estates and therefore untouchable.
Pay-on-Death or Transfer-on-Death Guidelines
When making out your will, you can instruct your lawyer and your executor (unless they are one and the same) to proceed with “pay-on-death” or “transfer-on-death” guidelines. These are specific instructions that pay all bills, creditors, etc., at the moment of your death. Transfer-on-death is similar, except that property and assets are immediately transferred to the appointed heir or party the minute you pass away.
You can transfer real estate, cars, assets, and securities with a transfer-on-death clause in your will. Financial accounts are usually the only things you include for pay-on-death, although special circumstances may exist for inclusion.
By paying everything out or transferring everything right away, probate hearings no longer become a necessity. The only thing your heirs would have to concern themselves with is if any of them contest the will. That’s an entirely different set of hearings.
Joint Ownership With Heirs
Joint ownership with a spouse may leave your spouse exposed to creditors and probate. However, if you have documents ready with transfer-on-death clauses in your will, you can create joint ownership of things you want to leave your husband or wife. For anything else, you can create joint ownership with an heir, such as cars or real estate. When you pass away, those heirs get exclusive ownership of the items and they don’t end up in probate as possible liquidable assets.
If you are naming non-family members as joint owners, no additional paperwork needs to be done and no legal hoops need to be jumped through. It simply becomes their sole property at the time of your death and is not listed as your property.
Give It All Away
You can’t take it with you, so why not give it all away? The upshot of giving away your assets either before you leave this earth or after as a term of your will is that you can claim it on your taxes. If you give it away to charitable organizations in your will, then your spouse can claim it on the taxes. It doesn’t leave much for anyone else, but if you don’t have any children or close friends to leave it to, giving it all away is a good option.
