When planning your estate, you may be wondering what goals should be your top priority. When researching online, you will likely come across conflicting or confusing information, and as a result, you may not know how best to move forward.
However, you have likely heard that doing your best to avoid probate is a good place to start when planning your estate. Probate is a process that assets held within an estate typically go through after a person passes away. It is a court-ordered process, and the reason why it can be beneficial to ignore it is because it can be costly and lengthy. Therefore, it limits the time it will take for your beneficiaries to gain their inheritance and the amount of inheritance that they will be able to gain. The following are some top tips for successfully avoiding probate.
Take advantage of joint ownership
Creating jointly owned accounts and policies is one of the easiest ways to avoid probate. Creating a joint account is usually most beneficial when you have one beneficiary in mind whom you would like to inherit all or the majority of your assets. However, there are some drawbacks to joint ownership with right of survivorship. In many cases, the assets held within may be treated as taxable gifts.
Use beneficiary designations
It is also possible for you to specify beneficiaries when it comes to key accounts such as IRAs and life insurance policies. If you have specified whom you would like to inherit these types of policies after you pass away, you are already engaging in probate avoidance.
Use a revocable living trust
If you wish to take probate avoidance a step further, one thing that you can do is consider a revocable living trust. By placing your assets into a trust, they are no longer belonging to you on paper, and this means that they will not be part of the probate process. Revocable living trusts also help you to make plans for what would happen if you become mentally incapacitated.
If you are starting to plan your estate and you’re interested in avoiding probate so that you can maximize your beneficiaries’ inheritance, consider combining different strategies to maximize success.
