When engaged in estate planning, clients often ask about probate, which is the process by which a person’s assets change hands at their death.
If a person dies and his or her will says that all assets are to go to the children, the children cannot take possession of those assets until the will and other papers have been filed with the probate court, and the probate court has given its approval. The whole process takes at least six months, and often more.
The Next Question?
Once people form a better understanding of the probate process, a common next question is, “Can probate be avoided?”
There are a number of different ways of holding assets that will avoid probate. The simplest is probably just joint ownership, such as a piece of real estate held as joint tenants or a bank account held jointly. This type of assets will pass automatically to the other joint owner when the first owner dies – but keep in mind, there will still be a probate at the second death.
Another way to avoid probate is by assets which have ‘designated beneficiaries’, such as an insurance policy or a retirement plan (such as an IRA). These assets will pass to those beneficiaries when the owner of the asset dies.
Still another way to avoid probate is to hold assets in a revocable trust.