Avoiding probate is desirable, especially when trying to save money, minimize hassle, avoid delay and protect the family’s privacy. These concerns, however, must be balanced with the value of having an independent executor to divide assets among family members. A fuller explanation of these factors is described in the article “why avoid probate?”
But once an individual has assessed her estate and decided it would be best for her assets to avoid probate, there are a number of options available. Below are the main instruments you need to know.
How to Avoid Probate with The Life Estate
A life estate is one of the easiest ways to avoid probate because of its simplicity in form. It is most commonly used in a deed for real estate. The operative language looks something like “To Mr. Arnold for life, and then to his children.” Such a provision operates in law just as it appears, and passes the property to Mr. Arnold’s children automatically upon his death, thereby avoiding probate.
Probate Avoidance with the Joint Tenancy
When two people own property as joint tenants (for example with real estate, checking accounts etc.), each one has the right of survivorship from the other in that asset. This is often as simple as putting both parties’ names on the controlling document, whether a deed or bank account agreement.
How to Avoid Probate with Beneficiary Designation in Massachusetts
Many assets allow for a “payable on death” or “transferable on death” provision to be included in the ownership designation of certain types of assets. These are, of course, well-known with life insurance policies, but can also be added to retirement plans of all kinds, IRAs and other financial accounts. You should check with your financial planner on these if you are unfamiliar with the terms.
Using a Living Trust to Avoid Probate
Creating a living trust enables you to separate legal title from equitable title, or in plainer terms; the right to own an asset is separated from the right to enjoy it. In such an instrument the beneficiaries (having equitable title) will have the right to any income from the asset, but the trustee (having legal title) will decide based on the trust provisions when and how much income that is.
This article would not be complete without a strong recommendation to contact an experienced Massachusetts Estate Planning attorney before attempting to plan your estate with these tools. Even a small amount of expert advice can save you significant hassles in the future.