Avoiding Probate: What Experts Say

Probate is often a complex and costly process that can cause stress for loved ones in the wake of a person’s passing. Luckily, there are various strategies you can take to prevent your estate from going through it. It’s just as important, however, to understand when it’s worth pursuing and how to sidestep common mistakes.

In this article, we’ve asked experienced estate planning attorneys to share their advice on avoiding probate. This includes a breakdown of how laws differ by state, effective estate planning strategies, and common mistakes people make. Finally, we’ll weigh the pros and cons of skipping the process.

What It Means to Avoid Probate

When someone passes away, their assets may go through probate (depending on the estate’s size, plan, and state laws). In this case, the court will oversee the passing of property and funds to beneficiaries, which can take much time to complete. To avoid this, people often plan ahead of time so their assets directly pass to whomever they’d like.

The techniques, as we’ll explore further below, are primarily meant to ensure beneficiaries directly receive assets. You can accomplish this in a variety of ways, including naming recipients in bank accounts, jointly owning assets, and establishing trusts.

Dana Blue, Esq, attorney at Dana Blue Law, explains that, while avoiding probate can be beneficial, it’s crucial to ensure your estate plan is conducive to your wishes:

Skipping probate can be a good idea, but it’s also important to make sure your whole estate plan matches what you want to happen with your money and belongings. You should plan for situations like getting very sick or changes in your family, like a divorce or new kids. The best plan doesn’t just avoid probate—it also thinks about taxes and what happens if you can’t make decisions for yourself. In the end, a good estate plan should make things easier for your family and make sure your wishes are followed.

Probate Laws Differ by State

Before deciding to avoid probate, it’s important to note that the rules can differ depending on the state you’re in. For this reason, “timeframes, costs and complexity vary significantly,” explains Blue. As an example, “states like California and New York have pricey and complex probate processes, which regularly push residents towards strategies to outright avoid probate altogether,” she adds.

If you have a smaller estate, however, the rules can be a bit simpler in some states. According to Blue, “Florida and Texas have simplified probate alternatives, and it reduces the urgency of avoiding the process.”

As you consider bypassing probate, be sure to speak with an estate planning professional who’s familiar with the laws in your state. An expert can help you build an estate plan that operates within your local laws. And, if you live in a state with simpler regulations, you may decide it isn’t necessary to skip it altogether.

Estate Planning Strategies to Avoid Probate

There are several strategies you can use to keep your assets from going through probate. Primarily, they come down to two key goals– either minimizing the size of your estate or transferring assets directly to beneficiaries. There are several ways to accomplish this, including through gifts or by establishing a trust.

Below is an outline of each method:

1. Establish a Revocable Living Trust

A common way to bypass probate is by establishing a revocable living trust. This document allows you to place your assets in the care of another person or organization, or a trustee. They allow you to bequeath assets because, by law, trusts do not require any disclosure except to beneficiaries.

2. Use Beneficiary Designations

Bank or retirement accounts in which you’ve specifically named somebody as a beneficiary can avoid probate. Similarly, Blue explains that many states “have transfer-on-death deeds for real estate, allowing the property to pass to heirs without going through probate.” Accounts with no beneficiaries, however, will pass through the process.

3. Gift Assets

Another method of ensuring your assets avoid probate is by simply gifting them to beneficiaries before you pass away. Be aware, however, that individuals may only gift up to $18,000 tax-free in 2024 ($36,000 for married couples), per the annual gift tax exclusion. Additionally, to ensure you don’t owe taxes, you must remain below the $13.61 lifetime gift tax exemption (as of 2024).

4. Consider Joint Ownership

If you own assets jointly, such as a home, they can avoid probate. Rather than go through the court, it’ll pass directly to the other owner(s), much like if you name someone a beneficiary for an account.

Pros and Cons of Skipping Probate

Avoiding probate brings several benefits, including saving time, money, and stress. Another advantage, per Tim Hurban, estate planning attorney at Hurban Law, is that it “keeps the estate matters private,” which may be crucial for some families.

It’s important, however, to understand the disadvantages and risks of skipping probate. “Setting up mechanisms to avoid probate, like trusts, can be costly and require ongoing management,” Hurban notes. This can increase the possibility of errors, such as mismanagement of assets, which may mean your wishes aren’t carried out as you want them to. Additionally, even if your assets don’t go through the court, they may still be subject to creditors if the estate owes money.

To weigh whether it’s worth it to dodge probate, you’ll need to think carefully about your wishes and whether the effort is justifiable. Blue describes those “who have property in other places or family scenarios where there is a potential for conflict” as examples of people who may want to avoid it. However, if you have a small estate, it may not be worth the time, money, and effort.

Before you commit to avoiding probate, consider these benefits and drawbacks with your estate planner:

Common Mistakes and How to Avoid Them

Precision and proactivity are critical when it comes to estate planning. Unfortunately, it’s possible to make mistakes if you’re trying to avoid probate. For example, you may fail to establish a trust in the right way or forget to account for state laws.

Blue says that, in her experience, a mistake people often make is “creating a revocable living trust but failing to transfer their assets into the trust, which leaves those assets subject to probate and defeats the purpose.” Another error is “not updating beneficiary designations,” says Oliver Morrisey, owner and attorney at Empower Wills Estate Lawyers.

How a Professional Can Help

Avoiding probate can simplify your estate and spare your loved ones unnecessary stress. However, it requires careful planning and the help of trusted professionals. Whether your estate is large or small, working with an estate attorney or financial advisor ensures your plan fulfills your wishes efficiently.

Estate planning attorneys can help ensure you’re operating within the boundaries of the law. They’re also adept at drafting and managing crucial documents, such as revocable living trusts, wills, and powers of attorney. Financial advisors, meanwhile, can assist with key tasks, like gifting or donating assets and naming beneficiaries on your savings and investment accounts.

Of utmost importance, though, is finding a professional who has your best interest in mind at all times. When it comes to financial advice, it’s key that whoever you hire strictly adheres to a fiduciary duty, such as a Certified Financial Planner (CFP) and Chartered Financial Consultant (ChFC).

If you need help finding a high-quality financial advisor near you, we recommend using this free matching tool. After a brief set of questions regarding your current situation and goals, it’ll present you with a vetted, local option.