Some people have become concerned about avoiding probate at all costs. But you don't need to take extreme steps to avoid probate such as divesting yourself of direct ownership of all your property. Preserving control over your finances and property while alive and reducing the expense and complexity involved in transferring your property upon death should be the primary goal of your estate plan.
Probate is the legal process which begins at death when all your earthly possessions - from your home, car and investments down to your wrist watch - come under the control of the local probate court. The court's job is to make sure all debts and death taxes are paid and that your directions as set forth in your will are carried out.
Although probate should only take six months, more often than not it will go for at least a year and often for several years. Before the court process turns over your property to your heirs and loved ones it will extract court costs and legal fees. Some ways to avoid probate are:
Joint Tenancy. With joint tenancy two or more people equally own an asset whether it is a car, house or bank account (actually any property can be owned in joint tenancy). After the death of one joint tenant, the remaining joint tenant will continue to own the entire property.
One drawback is that if you create a joint tenancy bank account by putting your lover's name on the account, he or she can take all the money and spend it for whatever they want. You must have complete confidence in the integrity and good faith of the person you are adding to your account.
Name a Beneficiary. If you name someone other than your estate as beneficiary of your life insurance, IRAs and employee benefits - such as 401(k) and pension and profit-sharing plans — that asset won't be subject to probate.
Totten Trusts. A totten trust is simply the name for a kind of bank account where one person deposits money in his or her name as trustee for another. The depositor reserves the power to withdraw all or part of the money at any time. Upon the death of the depositor the money in the bank account is paid to the named beneficiary of the trust, which could be the surviving lover, friends or family members.