Probate is an involved process, it takes time and it can be costly for one's heirs. Therefore, it makes sense for Texas estate planners to try to avoid probate for as much of their assets as possible. Fortunately, there are several "probate avoidance techniques" that may be able to benefit you in this regard.
Here are the four most popular ways for estate planners to avoid probate for their estate assets:
Giving up ownership of your assets: It may sound extreme, but if you want to prevent probate, you can simply give your property away. Some estate planners will give their assets away to a revocable living trust and put specific instructions in the trust documentation with regard to what should happen with the trust assets after they're gone. Estate planners might bequeath the trust assets to various beneficiaries who -- after the death of the estate planner -- will receive the assets directly without the need for probate.
Set up joint ownership with the right of survivorship: Joint ownership with the right of survivorship -- or tenancy by the entirety -- can be set up for certain assets, investments and financial accounts. This is a way for this property to become the immediate property of the joint owners or joint tenants upon the death of the other owner.
It should be noted, however, that joint owners could be hit with gift taxes that should be reported to the IRS. Also, entering into joint ownership could mean that -- if a legal verdict is instituted against the joint owner before the estate planner dies -- the property might need to be liquidated. There may be other potential drawbacks to joint ownership and tenancy by the entirety that should be investigated before selecting this strategy.
The strategic use of beneficiary designations: IRA, 401(k), insurance policies and other financial accounts may have a beneficiary designation associated with them. By indicating the person who is to receive certain assets after death on a beneficiary designation, an estate planner can bypass probate for those assets and have them go directly to the beneficiary.
Do you need to create a probate avoidance strategy?
Have you designed your estate plan in a way that bypasses the need for probate? By learning more about Texas estate planning strategies, you might find that only the smallest portion of your estate needs to go through this time-consuming and costly process.