There’s a common misunderstanding about probate and how it applies to different types of assets. Many people think that certain assets, like brokerage accounts, automatically bypass probate simply because of what they are. However, that’s not the case. The key to avoiding probate lies in how the asset is owned or whether a beneficiary is designated, not the type of asset itself.
First, let’s break down what probate is. Probate is a legal process that happens after someone passes away. It involves proving that a deceased person’s will is valid, identifying their property, paying debts and taxes, and distributing the remaining property as the will (or state intestacy law, if there’s no will) directs. This process can be time-consuming, expensive, and public, which is why many people seek ways to avoid it.
How to Avoid Probate
How do you avoid probate? There are generally two ways to do this:
Ownership Structure:
- Joint Ownership: If an asset, like a brokerage account, is owned jointly with someone else, then upon the death of one owner, the surviving owner automatically takes full control of the asset. This transfer occurs outside of probate.
- Revocable Living Trusts: Another way to avoid probate is by placing assets in a revocable living trust. After your passing, the trust maintains control of the assets and distributes them according to the instructions you’ve set within the trust.
Beneficiary Designation:
This method involves naming a person (like a son, daughter, or friend) as the beneficiary of the account. Upon your death, the asset is transferred directly to the named beneficiary, bypassing the probate process. This can be done for various accounts and assets, not just brokerage accounts.
Planning for the Future
If you’re uncertain about whether your assets, like brokerage accounts or savings accounts, will go through probate, or if you’re seeking ways to avoid probate, Clear Counsel Law Group is ready to help. Our team has extensive experience in creating trusts and other strategies to assist people in managing their assets effectively.
Proper estate planning is crucial in ensuring that your assets are handled according to your wishes after your passing. By understanding the ins-and-outs of probate and utilizing strategies to avoid it, you can ensure a smoother and more efficient transfer of your assets to your loved ones. For personalized assistance and expert guidance, consider reaching out to our legal professionals to help you through these important decisions.