Probate is the court monitored process of managing and distributing an estate. It is often a time consuming and expensive process. Fortunately, there are several ways to avoid probate of either part or all of the estate assets. With the proper estate planning techniques, you can avoid probate, at least in part, and save a lot of time, money, and headaches.
How do you Avoid Probate?
One of the best legal tools you can use to avoid probate is a living trust. In New Jersey, you can create a living trust for almost any and every asset you own. To create a living trust, you draft a trust document which will name a successor trustee, the person who will take over management of the trust upon your death. You will then transfer ownership of any assets you wish to put in the trust to yourself as trustee of the trust. These assets may include real estate, personal property, or bank accounts, among other things. Once ownership of the assets is transferred to the trust, the property will be managed pursuant to the terms of the trust. Upon your death, the successor trustee takes over and will be tasked with distributing the assets held in trust to your heirs, the trust beneficiaries, according to the terms of the trust. This distribution of trust assets falls outside of probate court proceedings.
Another way to avoid probate of assets is to hold property in joint ownership. Joint ownership comes with right of survivorship, meaning that, when you die, your interest in the property will automatically pass to the surviving co-owner. Probate would not be necessary to officially transfer this ownership interest. New Jersey allows for two types of join ownership: joint tenancy and tenancy by the entirety. Joint tenancy property means that the joint tenants own equal shares in a property. When property is owned in joint tenancy and one of the joint tenants passes away, that ownership interest automatically passes to the surviving joint tenant without probate. Tenancy by the entirety is just like joint tenancy, but only married couples and registered domestic partners in New Jersey may be tenants by the entirety.
It is also a good idea to add payable on death designations to any accounts that allow for this. Financial accounts such as bank accounts or certificates of deposit may have a payable on death designation meaning you have listed someone as the beneficiary of the account in the event that you die. The beneficiary will be able to claim the contents of these accounts after you die without the need for probate court proceedings.
Similar to payable on death designations is the option to assign a transfer on death registrations for any securities you may hold. New Jersey allows you to register stocks and bonds as transferable on death. You register the security and designate a beneficiary who will automatically inherit the security upon your death. Again, no need for probate court proceedings.
Using these kinds of estate planning tools will allow you to avoid probate for a sizeable portion of the assets of the deceased individual if not avoid the process completely. Minimizing the number of assets that need to be included in probate can also qualify the estate for the small estate summary probate process. While it is still probate, it is much simpler and does not require supervision of the court.
Careful and Considerate Estate Planning
Proper estate planning not only works to protect you, your well being, your assets, and the financial future of your loved ones, it also takes into account how to make things such as probate a less time and money consuming endeavor. At E.A. Goodman Law, LLC, we take into consideration all aspects of the estate planning process. Contact us today.
Posted in: Probate