News

The low down on probate and how to avoid it

Probate. Most people have heard the term, yet many are unsure what it means. Others know that the process is painful, but don’t realize that they can avoid it. Starting with a definition, here’s the low down: Probate is the legal process that seeks to determine whether a will is valid or not. Designed to protect the rights of a deceased person’s heirs and creditors, it involves a lot of paperwork as well as significant expenses for administrative and legal fees. During probate all details of a will become part of the public record. This means anybody can see what you owned and who your creditors and beneficiaries are. And the process is lengthy. In California, it can take the Superior Court anywhere from 9 months to one and a half years to complete it.

Not surprisingly, I recommend that you avoid probate by passing on a good portion of your assets through means other than a will. You can create retirement, savings, and brokerage accounts, or insurance policies and mutual funds that are designated to “become payable on death” or “transfer on death.” Or you can own your property jointly with someone else. In a joint tenancy (but not in a tenancy in common) the property of the deceased co-owner automatically passes on to the surviving co-owner, which at least delays probate.

Your best option for avoiding probate is a revocable living trust. Like a will, it allows you to control the transfer of property after you die but retain ownership of your assets until then. In the document you specify which assets should be part of the trust (you pass on the rest in a “pour-over” will) and you name the beneficiaries of your trust property, their alternates and a couple of other people who will fulfill important duties after your death. While it has no tax advantages, a revocable living trust is a risk-free and highly flexible tool. You can revoke the entire document or change its details at any time. If you wish to sell a piece of real estate in your trust, or decide to donate or need to spend the savings from a bank account, you are free to do so. To reflect the new situation you only need to amend your document. After you die, the person you have named as the successor trustee will manage and distribute your trust property according to your specifications. And your heirs will not have to wait for the Superior Court to complete probate.

by Kevin J. Moore