In a nutshell, probate is the court-supervised process of paying your debts and distributing your property to the people who inherit it. The average probate drags on for months before the inheritors get anything and by that time, there’s less for them to get. In many cases about 5% of the property ahs been eaten up by lawyer and court fees.
When a person dies with property, probate allows a court to determine who succeeds to the ownership of the property. Without it, there could be real confusion as to the ownership of property. Sometimes people die without a will, or intestate. In that case, courts follow the rules of intestate succession; that is, state law determines ownership of the property. Probate court then, is helpful in avoiding and setline the ownership disputes that may arise after someone dies.
Some items are never heard in probate court, and with good estate planning, you can minimize the items in your estate that are tied up in the probate process.
Many valuate assets don’t go through your will, and aren’t affected by probate, and if you don’t have a will, the state intestate succession laws. Here are some examples;
•Property you transferred to a living trust.
•Life insurance proceeds
•Funds in an IRA, 401(k), or other retirement account.
•Securities held in a transfer –on-death account
•Real estate held by transfer-on-death deed
•Vehicles held by transfer-on-death registration
•Payable-on-death bank accounts, or
Property you own with someone else in joint tenancy
All of these assets will pass to the surviving co-owner or to the beneficiary you named, whether or not you have a will.
Revocable Living Trust Living trusts were invented to let people make an end-around probate. The advantage of holding your valuable property in trust is that after your death, the trust property is not part of your probate estate. (Learn more about living trust on page 8)
Pay-on-Death Accounts and Registration If you don’t have your bank accounts set up this way, proceed immediately to the bank to take care of this. It’s one of the easiest probate avoidance steps you can make and it will save your family immeasurable time and misery trying to get to your funds if they need it to help pay some of your final need expenses.
You can convert your bank accounts and retirement accounts to payable-on-death accounts. You do this by filling out a simple form in which you list a beneficiary. When you die, the money goes directly to your beneficiary without going through probate. Your bank will have the form you need to make this change happen.
Without a pay-on-death status on your account, if you’re the single owner of the account, no one will have access to the funds in your account until the matter is settled in probate court. This is a way around adding a not so financially sound family member to your account while you’re still alive.
Transfer on Death For most homeowners, keeping a house out of probate is their biggest probate-avoidance wish—and challenge. Kansas is among a growing number of states that offer Transfer on Death Deeds, an easy and effective alternative for transfer of real estate outside of probate.
It’s like a regular deed used to transfer real estate, with a crucial difference: It doesn’t take effect until your death.
Given the maintenance requirements and rapid depreciation of cars and other vehicles, it makes no sense to have them sitting around for months or years while probate grinds on, before they can be transferred to their new owners. Kansas offers car owners the option of naming a beneficiary, right on the registration form, to inherit a vehicle without probate. It’s a simple, effective way to pass on cars, trucks, and small boats.
Designating a transfer-on-death beneficiary for your car is simple. All you do is apply for a certificate of car ownership in “beneficiary form.” The fee is the same as for a standard certificate. The new certificate lists the name of the beneficiary (or more than one), who will automatically own the vehicle after your death.
The beneficiary you name has no rights as long as you are alive. You are free to sell or give away the car, or name someone else as the beneficiary. If you own the vehicle with someone else – say, your spouse – you can still designate a beneficiary. The beneficiary will inherit the vehicle only after both you and the other owner have died.
Joint Ownership of Property Several forms of joint ownership provide a simple and ways way to avoid probate when the first owner dies. To take title with someone else in a way that will avoid probate, you state, on the paper that shows your ownership (a real estate deed, for example), how you want to hold title. Usually, no additional documents are needed. When one of the owners dies, the property goes to the other joint-owner – no probate involved.
You can avoid probate by owning property as follows:
•Joint tenancy with right of survivorship. Property owned in joint tenancy automatically passes, without probate, to the surviving owner(s) when one owner dies.
•Tenancy by the entirety. A similar process that can only be used for married couples.
Give it Away Want to avoid probate at the time of death, give away your possessions before you pass.