Yes, you can avoid probate with a little advance planning. Many people are interested in how to set up their assets in order to avoid probate (court proceedings to transfer their property to their beneficiaries) after their death. These vehicles will help you achieve that goal:
- Insurance policies—insurance proceeds will go directly to a beneficiary and avoid probate, unless the beneficiary is your estate
- 401Ks—money from a 401k will go directly to beneficiaries, avoiding probate
- Living trusts—you can put any asset into a living trust and avoid probate. To do this, you create a trust and transfer ownership of the assets to yourself as trustee; after that the property is controlled by the terms of the trust. A successor trustee is named who will transfer the assets to your beneficiary after your death.
- Joint ownership of property—In Indiana, if you own property with another person and there are “rights of survivorship,” the survivor automatically owns the property when you die. There are two forms of joint ownership: joint tenancy and tenancy by the entirety, which only applies to real estate owned by husband and wife.
- Pay on Death designations—you can add pay on death designations to bank accounts or certificate of deposits, which then go directly to the beneficiary, also bypassing probate. Sometimes these are called transfer on death accounts. It is a good idea to name a contingent beneficiary should the beneficiary die before you do. (Note: pay on death accounts are different than joint ownership accounts. With joint ownership accounts, both parties get full access to the assets and income produced, whereas with POD, the beneficiary only gets access when the owner dies.)
- Transfer on Death for securities—Indiana also lets you register stocks and bonds in TOD (transfer on death) form that avoid probate.
Make sure to contact an estate planning attorney who can make the best recommendations for your situation.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.