The costs and delays associated with probate are well known and widely publicized. Often, the best way to avoid probate is to create a revocable “living trust.” You probably already know this, if you’ve read any articles or books about estate planning.
However, there are other ways to avoid probate, and some people should consider these alternatives.
The most common non-trust way to avoid probate is to simply shift property so that it is not subject to probate proceedings. For example, real estate, bank accounts, and securities owned in “joint tenancy” will not be subject to probate when one owner dies. Many realtors continue to make the mistake of advising married couples to take title to real estate in Joint Tenancy because it avoids probate without realizing that real estate held as Community Property also avoids probate and receives better capital gains treatment than Joint Tenancy.
Further, automobile titles and most bank and financial accounts can include a “pay on death” or “transfer on death” designation (sometimes called an “in trust for” account by banks). Such property passes automatically to the named person without any probate court supervision.
If all of a deceased person’s property will pass to the surviving spouse, probate can be avoided by filing a “spousal property petition,” seeking court confirmation that the surviving spouse owns the property. Married couples leaving property to each other should in most cases make sure that title is held as “Community Property” (and NOT Joint Tenancy) because Community Property receives better capital gains treatment.
Even if property is left to someone other than a surviving spouse, if the total value of a deceased person’s property otherwise subject to probate is less than $100,000, an affidavit procedure is available to transfer personal property, and transfer of real property can be confirmed through a relatively simple petition proceeding.
It is important to realize that some people may benefit from the finality of a probate proceeding. For example, a probate proceeding will usually prohibit new claims from being raised after a short claim period. Also, if anyone is expected to contest the deceased person’s disposition of property, a probate proceeding can resolve these claims in an orderly way.