For many people, probate is not the best solution for settling an estate. Probate proceedings can be long, expensive, and frustrating for the heirs and the executor. Fortunately, there are perfectly legal ways to avoid probate.
Probate Explained
After someone dies, their property – their stuff – has to go somewhere. So, if the person who died left a valid Will, someone submits the Will to the court to be probated. An executor appointed by the court begins the sometimes tedious process of gathering the decedent’s assets and claims against the estate. Claims are paid, property is distributed to heirs, and the executor closes the probate when everything is done.
When there is no Will, the property is still distributed. However, the law determines who gets what, not the decedent.
It is usually best for the heirs when the decedent’s property does not pass to them through probate. We’re going to look at three ways to make this happen.
Joint Tenancy
With this type of property ownership, two or more people own the property. Each owner has an undivided, equal interest in the property. In joint tenancy, a deceased owner’s interest does not pass to the other joint tenants.
Sometimes a property is owned by joint tenancy with right of survivorship. This means that if one owner dies, the other owner gains possession of their ownership interest. In Alabama, this joint tenancy with the right of survivorship does not occur automatically. Instead, the right of survivorship must be clearly stated in a legal document.
Property that passes through right of survivorship usually does not become part of the probate estate. Without the right of survivorship, it does.
Beneficiary Designations
With most financial accounts and certain other assets, the owner may designate who will receive the asset upon the owner’s death. You’ve probably seen beneficiary designations on retirement accounts, bank accounts, and insurance policies.
One thing to remember is that beneficiary designations trump the Will. Usually, property that is passed through beneficiary designations will not pass through probate. Instead, it is transferred quickly to the beneficiaries named by the deceased owner.
Although the speedy transfer is great, discuss these designations with your estate planning attorney. Unless your estate plan and the designations are in sync, your heirs could receive more or less than you intended. For example, if your Will states that your three children will inherit equal shares of your estate, but you name your oldest child as beneficiary on your insurance policy, the oldest child will likely receive more than the other two children.
Revocable Living Trust
Trusts are useful estate planning tools. There are various trusts for various purposes, including the revocable living trust.
Revocable means the trust can be changed fairly easily by the settlor, the person who established the trust. After signing the trust document, the settlor transfers assets to the trust. This type of trust can be used to avoid probate, reduce estate taxes, or manage assets. In general, trusts avoid probate because the trust assets never become part of the settlor’s estate.
A Little Planning Is What’s Needed.
For most people, it’s not that difficult to avoid probate. It just takes some astute estate planning with the assistance of an attorney who knows Alabama law.
The attorneys at Adams & Miller have the experience you need to get the estate plan you deserve. Contact Adams & Miller, P.C. at 256-251-2137 to schedule an appointment or fill out our convenient Contact Form. We help clients in Anniston, Talladega, Birmingham, Gadsden and surrounding communities.