How You Can Avoid Probate – and Why You May Not Want To

A virtual touchscreen with probate option buttons.Probate is often something that people wish that they could avoid.

The truth is that probate is not an inherently bad thing, nor something to be fearful of. In fact, it can be a very helpful process that offers an independent entity – the probate court – to oversee and ensure that a decedent’s wishes are met.

But it is also true that there are certain situations where you would want to do some advanced planning designed to avoid probate.  To get a better picture of when and why someone would want to avoid probate, let’s first review what probate is and the function of the probate court.

What is Probate?

Probate is a legal and administrative process of settling an estate that takes place after someone passes away. A probate asset is a solely owned asset that has no existing procedure for being transferred to a successor owner.  As such, the asset needs to be “probated” or legally taken through the probate process before an inheritance can take place.

In Connecticut, full probate is required when the decedent:

  • owned individually held property without a beneficiary designation that is greater than $40,000; or
  • had any amount of solely owned real estate; or
  • has certain legal actions (such as a wrongful death claim) pending that need to be untaken by the estate.

What is the Role of the Probate Court?

Essentially, the function of the probate court is to ensure:

  • the validity of a Will;
  • the deceased’s property and possessions are safeguarded from theft or neglect;
  • valid bills, taxes, or debts owed, if any, are paid in full; and
  • property and possessions are distributed to the intended beneficiaries as recorded in the decedent’s Will.

AdobeStock_325370692-300x250Why Avoid Probate?

The probate process is not typically an expensive or an overly long process – usually 6-12 months in total – but there are some factors that could prevent things from going smoothly.

Most often, the time and cost of probate increases if the following types of issues arise:

  • the estate is complex
  • the decedent owned out-of-state property
  • family dysfunction
  • the estate has an untrustworthy or unknowledgeable executor
  • ambiguous instructions left behind by the decedent, such as a poorly drafted Will

In instances such as these, avoiding probate may be helpful in reducing stress, money, and time spent. Nonetheless, it is important to remember that regardless of whether you go through probate or avoid it, the probate court’s fees cannot be avoided. Similarly, an estate tax return is required by law for all Connecticut estates, regardless of whether probate is required.

How to Avoid Probate

In Connecticut, if an estate (1) meets the “small estates exclusion” or (2) has no probate assets, full probate can be avoided.

In the former category, the small estates exclusion is met if the decedent’s solely owned assets included no real property and are valued at less than $40,000. So, for example, let’s say the decedent owned and lived in an RV worth $30,000, but had no other assets or property. In this instance, full probate would not be required. The estate could be settled under a shorter and simpler process whereby probate assets are addressed via a one-time affidavit by a petitioner, and with some additional probate forms concerning the decedent’s assets and debts.

In the latter category, if there are no probate assets, then no probate is needed, but Connecticut state law still requires the filing of an estate tax return.

If you don’t fall within those two scenarios and want to avoid the probate process, there are a few techniques that can be utilized as part of your estate plan to provide this outcome. These include:

AdobeStock_637141132-300x168-11. Utilizing a revocable living trust, which can be amended or even revoked at any point in your lifetime. A trust allows you to transfer legal title of assets to a trustee (often yourself), who can complete the administration of your estate without going through probate.

Because assets in a living trust are not counted as part of the probate estate, they do not have to go through probate, but can be distributed upon the grantor’s death as directed by the trust. (This does not mean that they are not part of the gross taxable estate and subject to state or federal estate tax.)

In addition to probate avoidance, a trust:

  • gives beneficiaries immediate access to your assets.
  • keeps estate details such as the estate’s value, your beneficiaries, and their addresses, and who your creditors are, private, while the probate process is public.
  • better protects your beneficiaries from disgruntled individuals who may challenge your Will.

2. Establishing jointly owned accounts such as:

  • A joint bank account withright of survivorship”- meaning it will pass to the surviving co-owner. (Assets with joint tenancy also allow for property to pass automatically to the surviving tenant under right of survivorship and therefore would not be subject to passing through probate either.)
  • Payable on death (POD) accounts. Under a POD arrangement, your assets will automatically transfer to your selected beneficiaries upon death.
  • Transfer on death (TOD) accounts. A TOD account applies to securities such as stocks or bonds.

It should be noted that although these forms of transferring ownership would effectively avoid probate, they wouldn’t necessarily offer the protection a trust does. Establishing joint accounts may carry some risk, as it could end up being inconsistent with the wishes you have left in your Will. For example, under a POD arrangement, when you pass, your assets will automatically transfer to your named joint owner or chosen beneficiaries, who are under no obligation to share the assets with any other beneficiaries who may be named in your Will or trust.

3. Having assets with designated beneficiaries. Assets (i.e. personal property items or accounts) with designated beneficiaries pass directly to named beneficiaries without having to go through probate. This would include assets such as life insurance policies, retirement accounts and some bank or brokerage accounts that are either POD or TOD, as noted above.

Regardless of whether you avoid probate, it is wise to consult with a Connecticut estate planning attorney who can walk you through your options and the pros and cons of each.  In addition, working with qualified legal counsel can provide you guidance on the estate administration process, ensure that all necessary forms are filed both timely and correctly, and help to ensure that assets are properly distributed to beneficiaries.

If you need help considering your options regarding probate avoidance, give us a call. We’d be happy to assist you.

Related Posts:

Trusts and the Probate Process: What You Should Know

Do You Have to Go Through Probate?

Out-of-State Property and Probate: What You Need to Know

When a Spouse Dies: 1 Reason You Must File with the Probate Court

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