Avoiding probate is a great idea. Probate is a court process that appoints someone to close our your affairs. You surely don’t want a judge or court system involved in your life or death. The good news is, you can avoid probate in a number of ways. Find out about them here.
Revocable Living Trust
Writing a revocable living trust is a simple, straightforward and effective way to get rid of probate. It serves as an alternative to a last will and testament. A revocable living trust places the property and assets of a person “in trust.” A trustee is named to manage the property and assets for the beneficiaries. Assets that are tied to a revocable living trust, by this very fact, avoid probate.
This also applies to assets in irrevocable trusts. Irrevocable trusts cannot be changed once they are written. This is the main reason why they are not commonly used. A main reason people have irrevocable trusts is if they have a very, very large, multimillion dollar life insurance policy for which they need tax protection.
Joint ownership can avoid probate if it is with right of survivorship. Right of survivorship means that if one person dies, the other person, or the surviving owner, will automatically own the property in question. There are 2 kinds of joint ownership. There is joint tenancy with right of survivorship. This means both people own a property equally and if one dies, his/her half rolls to the other person. There is also community property with right of survivorship. This is the same as joint tenancy, except it is for married couples. Since Arizona is one of 11 community property states, property can be owned as community property with right of survivorship. With right of survivorship property, there is no probate needed on the first joint owner’s death. However, there could be probate needed on the death of the second owner.
The way to avoid probate on the second owner’s death is to do a beneficiary deed for the property. This is a deed that basically says that when both joint owners die, the property goes to the named beneficiary. The deed is recorded.
Beneficiaries on Retirement Accounts, Bank Accounts and Insurance
You can actually name beneficiaries on your bank accounts, investment accounts, retirement accounts, pensions and life insurance. This is done one of two ways. Bank accounts and investment accounts usually use Pay on Death, or Transfer on Death forms. You fill out the form and name the beneficiaries right on the form. When you die, the beneficiary takes your death certificate to the bank or brokerage house and gets the money.
Retirement accounts, pensions and life insurance use beneficiary forms. You can usually name a primary beneficiary and a secondary beneficiary, also known as a contingent beneficiary.
If beneficiaries are named on accounts or insurance, those accounts and insurance avoid probate. Keep in mind that these named beneficiaries have no authority to have the money or make any decisions on these accounts and insurance until your death. Your named beneficiaries cannot go to the bank and say that because they are named, they are entitled to anything while you are alive.
As with insurance, you can name a primary beneficiary and a secondary or contingent beneficiary on bank accounts, retirement accounts and investment accounts.
Beneficiaries for cars
The Motor Vehicle Division in Arizona lets you beneficiary designate your vehicles, trailers and other items with MVD registration. You simply fill out the beneficiary form. This does not avoid a trip to MVD for your beneficiary, but it does let your vehicles, etc. avoid probate.
Small estate affidavit
If your estate is small enough, your loved ones may be able to use a small estate affidavit to avoid probate. If all of your accounts, insurance, retirement accounts and investment accounts, that do not have a beneficiary named, total less than $75,000, then a small estate affidavit may be appropriate.
If your real estate is small enough, your loved ones can also use a small estate affidavit for the property. The real estate has to have a net worth of less than $100,000. Net worth means the value of the house minus any mortgages totals less than $100,000.
You might realize now that avoiding probate is easier and more doable than you thought. If probate for a loved one is unavoidable, then hire the services of a trusted lawyer. Contact Sue Sandys today.