The probate courts help to protect parties interested in an individual’s estate after they die. By overseeing estate administration, the probate courts help ensure that the personal representative or executor administering an estate follows the instructions provided by the deceased party.
In the relatively common scenario where an individual dies without a will, the courts help ensure that estate administration complies with intestate succession laws. The probate courts can hold personal representatives and trustees accountable for violating their fiduciary duty. They provide creditors, beneficiaries and heirs with opportunities to assert themselves.
However, probate proceedings can increase estate administration timelines. They can also diminish what beneficiaries or heirs inherit by generating court costs. People establishing estate plans often have an interest in limiting how much of their property passes through the probate court. How can testators achieve that goal?
By taking on co-owners
Generally speaking, the property that belongs directly to an individual becomes the property of their estate when they die. Testators can protect certain assets by extending co-ownership rights to their chosen beneficiaries while they are still alive. People can add family members and other intended beneficiaries as co-owners to real property and bank accounts.
Provided that they follow the appropriate steps, the co-owners can potentially assume ownership of the asset without it passing through probate court first. In the scenarios where individuals do not want to take on co-owners while they are alive, making transfer-on-death arrangements can be an option for a number of valuable assets.
By funding a trust
People who wish to protect their assets often create a trust to hold those resources. Trust can protect assets from creditor claims and estate recovery efforts. They can diminish the taxable value of an estate to protect testators from estate taxes.
They can even help people qualify for Medicaid benefits if their health declines as they age. The assets held by a trust no longer belong to the party funding the trust. Therefore, they are not part of the estate that passes through the probate courts.
There may be other solutions available as well, depending on the property a testator wants to protect. Creating an inventory of assets and a list of estate planning goals may make it easier for people to create robust plans that preserve their resources and uphold their wishes.