If you have ever dealt with a prolonged probate, you may understand the importance of avoiding this timely and costly process. For small estates with few heirs, probate may be short. For larger estates, however, probate may takes months or years and court costs could eat away at value of the estate.
Revocable Living Trust
A Living Trust is an excellent way to circumvent probate. This estate planning document can hold almost any asset including cars, real property and even bank accounts. Once you fund an asset into your Trust, it can easily pass to your heirs upon your death. Probate will likely not be needed for your estate if you have fully funded your Living Trust.
If you are married or in a domestic partnership, joint ownership is a good way to avoid probate. Property owned jointly may be owned either by joint tenancy with right of survivorship or by tenancy by the entirety with right of survivorship. Joint tenancy may be used by any persons who equally share a piece of property. Upon the death of one the other can inherit the decedent’s share outside of probate. Tenancy by the entirety ownership may only be used by married couples. Like joint tenancy, the property will effortlessly pass to the remaining spouse.
Pay on Death Accounts
If you have a savings account, certificate of deposit or other type of bank account, your financial institution may allow you to pass that account to an heir upon your death. To do so, fill out a beneficiary designation form with your bank. Your chosen heir will not have access to your account until you have passed away, but at that time he or she can take all account funds without probation.
Transfer on Death Designations
You can pass real estate or securities such as stocks and bonds with a transfer on death designation. This allows the property to be titled in your heir’s name without probate. Although some states allow it, in the state of Arkansas motor vehicles may not pass via a Transfer on Death.