Probate can be short and easy or long and complex, depending on the will or lack thereof, estate planning precautions and the size of the estate. In general, most of an estate goes through probate.
However, there are assets that do not go through probate and go through distribution more quickly.
Jointly owned property
Assets owned jointly with the right of survivorship automatically pass to the surviving owner without the need for probate. Common examples include real estate or bank accounts held jointly by spouses or family members.
Retirement accounts with designated beneficiaries
Individual Retirement Accounts, 401(k)s and other retirement accounts allow owners to designate beneficiaries. Upon the owner’s passing, these assets transfer directly to the named beneficiaries, bypassing probate.
Life insurance
Life insurance policies often designate beneficiaries who receive the proceeds directly upon the policyholder’s death. These payouts are exempt from probate.
Payable-on-death bank accounts
Bank accounts with payable-on-death designations also offer a straightforward method for asset transfer. The account holder designates a beneficiary, who gains access to the funds upon the account holder’s death.
Living trusts
A living trust is similar to a will, but everything in it does not have to go through probate. This is because individuals transferred ownership of everything in the trust directly to the trust. The courts cannot touch it.
According to Gallup, 46% of Americans have a will of some form. The probate process can be an expensive and frustrating process, and this applies even more when there is no will. However, individuals can keep certain valued possessions or funds out of it by putting them in living trusts, adding the intended beneficiaries’ names to them or putting them in special accounts. Proper estate planning and early will writing can benefit beneficiaries greatly.
