Probate is a court-supervised procedure where estate administration, the process of settling debts and distributing assets, begins. It’s costly, it makes the estate’s contents a matter of public record and it takes time, anywhere from six months to two years.
Many would like to bypass probate entirely, and that can be done, but it takes planning. Here’s how you might proceed.
Small estate provision
In Indiana, for estates of $50,000 or less, there’s no probate per se, although an affidavit or written statement accounting for the estate’s assets or debts and listing the beneficiaries’ contact information should be provided to the court within 45 days of the date of death.
Joint ownership with survivorship rights
For real property, there’s a construct known as joint tenancy with rights of ownership. One owner dies and the other owner retains full title to the property. Another version of this is tenancy by the entireties, but it applies only to married couples.
Joint ownership can apply to other properties as well. Physical items such as cars, boats and planes can have title documents that reflect ownership with survivorship rights. Liquid assets such as bank and brokerage accounts can also be transferred in the same way.
Pay-on-Death (POD) or Transfer-on-Death (TOD)
With POD and TOD property, beneficiaries are designated and have no rights in the property until date of death.
- POD: For bank accounts and IRAs, a form is filled out, and upon death, the monies are paid to the beneficiary and the account is closed.
- TOD:
- For stocks, bonds and other securities, title is transferred upon death to the beneficiary.
- Indiana is among the states that allows a motor vehicle’s title to be set up in much the same way.
- Indiana is among the states where this can be done for real property as well. To accomplish this, a transfer on death deed has to be executed and recorded.
Revocable living trusts
Here you create a trust, an entity that is separate from you, and transfer title of your property to it, while maintaining total control of the trust as its trustee. Upon death, a successor trustee distributes your assets per your instructions.
The revocable living trust is more costly to set up than a will, but depending on the size of your estate, it may save time, hassle, and a considerable sum of money down the road.
Finally, gifting is another plausible option. Why wait until death? You can simplify matters and pare down holdings by transferring property before you die.
Sidestepping probate is a challenge, but there are means and ways to do it. It might be prudent, though, to consult with counsel or a financial advisor to guard against unforeseen missteps.