Recently this blog covered what to expect during probate. As mentioned, probate can seem overwhelming, and you may not want to go through the time, expense and publicity associated with the probate process. Fortunately, there are some ways a person in New York can avoid probate through estate planning.
Gift assets
Small estates do not necessarily have to be probated. One way to reduce the size of your estate is to gift assets during your lifetime. One advantage of this is it could also lower your federal estate taxes if you would otherwise have a large estate. Note there are limits on how much you can give away tax-free each year. Gifting also gives you the personal satisfaction of seeing what your heirs do with their inheritance.
Living trusts
Trusts are not subject to probate. This is because the trustee, not you, is in charge of the assets placed in the trust and must distribute them per the terms of the trust. A living trust can be revocable or irrevocable. If revocable, you can name yourself as trustee and change the terms of your trust as you like during your lifetime. The terms of an irrevocable trust cannot be changed.
Payable on death accounts
Some accounts can be designated as “payable on death.” This means they bypass probate and go directly to the named beneficiary on the account. Bank accounts are one type of account that can be designated as “payable on death.”
Joint ownership of property
Sometimes spouses jointly own a piece of property as joint tenants with right of survivorship or tenancy by the entirety. If so, when one spouse dies the entire asset goes to the other joint tenant spouse without going through probate.
You can avoid probate if you wish
As this shows, there are a variety of ways you can use estate planning to avoid probate. Some people find that it is worthwhile to avoid probate, due to the time, publicity and expense of the probate process. Ultimately, it is important to execute an estate plan that meets your wishes, whether that means avoiding probate or not.