What document should I use to prevent probate after my death?
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Probate is a general term for the entire process of administration of estates of deceased persons, including those without wills, with court supervision. It involves the process of proving a will is valid if the deceased died with a will and thereafter administering the estate of a dead person according to the terms of the will. It is a judicial act or determination of a court having competent jurisdiction establishing the validity of a will. Another function of probate is to provide for the collection of any taxes due by reason of the deceased's death or on the transfer of his or her property. Reasons for avoiding probate are the fees set by statute and/or the court (depending on state laws) for attorneys, executors and administrators, the need to publish notices, court hearings, paperwork, the public nature of the proceedings and delays while waiting for creditors to file claims even when the deceased owed no one. Probate usually occurs in the local court where the deceased permanently resided at the time of death. If the deceased did not have a will, each state will have its own pattern for distributing the deceased's real property.
Even if there is a will, probate may not be necessary if the estate is worth no more than a stated dollar value or is small with no real estate title to be transferred or all of the estate is either jointly owned or community property. Small estate administration is an alternative to a formal probate of an estate when the assets, liens, and encumbrances of the estate are under a certain statutory amount, which varies by jurisdiction. It is a faster, easier, alternative to the probate process, involving less paperwork and delay. It involves the use of a small-estate affidavit for estates ranging from $1,000 to $100,000, depending on state law. This approach is particularly advantageous where the bulk of the estate is in a trust and only an automobile or small bank account is in the name of the decedent at the time of death. No court administration is required. The administration of the estate may be commenced a certain time after death, usually 30 days, and the appointment of a personal representative is made. An inventory and appraisal must be filed with the court. The personal representative, after giving any required notice to creditors, may immediately disburse and distribute the estate to the entitled persons. A verified statement to close and a full account in writing must be filed with the court and copies served on all distributees and creditors whose claims are neither paid nor barred.
Trusts in which all possessions are managed by a trustee, making lifetime gifts, or putting all substantial property in joint tenancy with an automatic right of survivorship in the joint owner are methods of avoiding probate of assets. A trust is an entity which owns assets for the benefit of a third person (beneficiary). A living trust is a trust established during a person’s lifetime in which a person’s assets and property are placed within the trust, usually for the purpose of estate planning. The trust then owns and manages the property held by the trust through a trustee for the benefit of named beneficiary, usually the creator of the trust (settlor). The settlor, trustee and beneficiary may all be the same person. In this way, a person may set up a trust with his or her own assets and maintain complete control and management of the assets by acting as his or her own trustee. Upon the death of the person who created the trust, the property of the trust does not go through probate proceedings, but rather passes according to provisions of the trust as set up by the creator of the trust.
Perhaps the biggest advantage of a living trust is that it does not have to go through probate, as does a will. All property of a decedent may not be subject to the probate process. Life insurance, retirement accounts, real estate held as joint tenants with right of survivorship and other joint tenancy property can pass directly to the appropriate beneficiary automatically. The involvement of the court to transfer such property is not required. A bank account or motor vehicle title may also specify a death beneficiary and thus be exempt from the probate process.