In a perfect world, we would pass away and the loved ones named in our will would instantly receive the assets we've bestowed upon them. However, because numerous disagreements can arise during the estate distribution process -- and because creditors get a chance to lay their claims upon the state prior to distribution -- an estate needs to go through probate before its assets can be distributed.
Probate takes time, money and it can be stressful for heirs to navigate. For this reason, many Tennessee residents employ some of the following four probate-avoidance strategies in their estate plans:
- Joint property ownership: By naming your heir as a joint tenant on an asset, your heir will be a co-owner of the property. As such, when you pass away, your heir will simply assume complete ownership of the property without the need for the probate process.
- Death beneficiaries: Most insurance and financial accounts will have a beneficiary designation. When you complete the beneficiary designation, the named person can receive the assets upon your death without probate.
- Revocable living trusts: When surrendering your assets to the ownership of a trust, you can name your heir as a beneficiary the trust. Legally, you no longer own these assets -- even though you can dismantle the trust at any time. As such, the trust assets will go directly to the beneficiary and bypass probate.
- Gifting your assets: By giving away your assets before you die, you can also transfer ownership without the need for probate.
These are the four most common way that estate planners avoid probate for their heirs. Make sure that you understand all of the various probate avoidance strategies fully before you decide on the best estate planning methods to meet your needs.
Source: FindLaw, "Avoiding the Probate Process," accessed Jan. 12, 2018