How Can I Avoid Probate?

There are many ways to avoid probate. There is a lot of confusion about how to avoid probate court because the process was built over time via various procedures, state laws, and the initiative by major financial institutions to protect their own interests, not necessarily the interests of their customers, who they claim to serve.

Here are some of the many tools that are used, but note that none of them are perfect for avoiding probate court:

  • Payable on death clauses. This is a form which allows the owner of an asset to designate who receives the asset after the owner dies.
  • Beneficiary designations. As with a payable on death clause, this is a form which allows the owner of an asset to designate who receives the asset after the owner dies.
  • Jointly held property with rights of survivorship. This typically applies to real property, whereby the commonly held property goes to the survivor upon the death of the other co-owner.
  • Living trust. This is a document that allows the person who sets up the trust to transfer property after his or her death based on that person’s written instructions.

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Which Tool Should I Use?

Payable on Death Clauses and Beneficiary Designations
How to avoid probate depends in great part on the underlying asset that you are trying to transfer on the death of the owner. For example, payable on death clauses and beneficiary designations do avoid probate court, but they only work for assets such as stock, life insurance policies, or bank accounts. And there are still pitfalls for payable on death clauses and beneficiary designations.

Joint Tenancy with Rights of Survivorship
You can also avoid probate court by placing real property in joint tenancy with a right of survivorship. But joint tenancy with a right of survivorship has many problems as well. A co-owner may go through a divorce or bankruptcy and jeopardize the property rights of the other joint tenant.

Many of my clients ask “Does a will avoid probate?” The answer is generally no; in fact, although a properly drafted will ensures that property will go to the right people, it does not avoid probate court if the other devices are not properly used as listed above. Likewise, as set forth above, there are special problems with real property which is the major driving force behind the decision of most people to do a trust. Some attorneys insist that a living trust is the perfect device to how to avoid probate; but even a living trusts has its problems.

Living Trusts
The major problem of a living trust in avoiding probate is that it is really a two-step process; the first step is to properly draft the living trust, and that is not necessarily common sense or intuitive; the second step is to retitle assets into the name of the trust. The failure to properly retitle assets into the name of the trust is the leading cause of a trust failing to avoid probate.

If you live in cities of San Francisco, Berkeley, Albany, Pinole, Crockett, Martinez, El Sobrante, El Cerrito, Vallejo and Richmond and the surrounding areas, give us a call at (510) 724-2020 or contact us to discuss your situation and determine the best way to protect your assets.

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