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What is probate, and why consider an estate plan aimed at avoiding it? P.2

Last time, we began to discuss the topic of probate avoidance, and some of the means that can be used to avoid probate when doing so may be desirable. On that point, it is important to note that probate isn’t necessarily always completely undesirable. For many individuals and families, the likely costs, time and relative lack of privacy of probate are not always significant enough to justify the planning and alternative costs of building an estate plan around avoiding the process.

It should also be mentioned that avoiding probate should hardly ever be the sole aim of estate planning. There are other factors to consider as well, and these factors, taken together, may dictate against avoid probate. That being said, let’s look at several additional options available for probate avoidance. 

Besides joint ownership with rights of survivorship, another important probate avoidance method is to use beneficiary designations wherever possible. This includes life insurance policies, retirement accounts, payable on death and transfer on death accounts. Beneficiary designations allow property to pass directly to the beneficiary upon the death of the policy or account holder, making court intervention unnecessary.

A third useful tool in avoiding probate is trust arrangements. Putting assets in a trust, which entails titling them in the name of the trust, means that a court is not necessary to transfer those assets upon the death of the owner. Setting up a trust arrangement does cost money, and it is important to weigh the overall benefits of a trust arrangement against the relative costs and risks of probate.

Lifetime gifting is a yet another way to avoid probate. The idea is simple: if you give an asset away, a court is not required to administer the distribution of the asset. Lifetime gifting can be a valid way for some people to reduce their estate for estate tax purposes as well, but it is important that people use gifting as one part of an overall estate planning strategy.

Working with an experienced attorney is important in estate planning, no matter what goals you have in the process. Avoiding probate is possible and can be desirable in some cases, and an experienced attorney can help an individual ensure the proper steps are taken to achieve that goal.

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