Although so many people believe that they should avoid probate, not many really understand what that means. Avoiding probate does not necessarily mean you can avoid estate taxes or other expenses. Having a last will and testament does not mean you can necessarily avoid probate. In fact, there are many misconceptions about probate. But, if you want to avoid it, you should talk to your Missouri probate attorney before you make a decision.
Four primary ways to avoid probate
In most cases, there are four ways to transfer ownership of the assets in your estate without going through the probate process. These methods include:
- operation of law
- small estate affidavit
Any of these methods, when used correctly, can allow you to avoid probate. Your Missouri probate attorney can help you with determining which method is required.
Transferring an estate using a trust agreement
One of the primary benefits provided by a trust is probate avoidance. With a trust, all of the property you transfer to your trust can later be transferred to your chosen trust beneficiaries without going through the probate process. The trustee you select to manage the trust property until your death will then make sure the distribution of your trust property takes place as you intended, upon your death.
Transferring an estate through the right of survivorship
In many cases, two people can hold title to the same property in “joint tenancy.” This means they have basically chosen each other as their beneficiary upon their death. This is also referred to as “right of survivorship.” The right of survivorship applies not only to personal property but real estate as well. Property held in joint tenancy is not required to go through probate in order to be conveyed to the proper beneficiary.
Transferring an estate by designating a beneficiary
Another simple way to transfer property and avoid probate is through a beneficiary designation. For instance, life insurance policies and retirement accounts are merely transferred to the designated beneficiaries upon the primary policy or account holder’s death. A payable-on-death account functions the same way. Some bank accounts, for example, can be converted to payable-on-death accounts by simply completing a form that lists the chosen beneficiaries of that specific account. Then the money in the account will be transferred automatically to your named beneficiary, upon your death, without the need to go through probate.
Claiming property with a simple affidavit
In both Missouri and Kansas, heirs are also allowed to avoid probate in cases where the total value of the estate is less than about $40,000. All that is required is a short affidavit stating that the heir is entitled to a specific piece of property. The affidavit must be signed under oath and then submitted to the individual or institution holding the property, along with a copy of the death certificate. The third-party, such as a bank, would then release the property to the heir. In some states, the law may require that the affidavit is filed with the probate court. So, talk to your Missouri probate attorney to make sure you follow the proper procedures.
The purpose of the small estate affidavit
The basic purpose of the affidavit used for small estates is to inform the probate court that this particular estate meets the requirements for simplified summary probate administration and that general probate proceedings are not required. Another way to do it by filing a written request to use the simplified procedure with the local probate court. If the court approves the request, the executor will be authorized to distribute the assets without going through the full probate process.
Gifts are another option that is often overlooked
Giving away your assets while you are still living is another way to avoid probate. Simply put, if you don’t own the property at the time of your death, then the property does not need to go through probate. Therefore, the cost of probate is lower because the expense of probate is based on the value of the assets being handled through probate.
If you have questions regarding probate, or any other estate planning matters, contact Gaughan & Connealy for a consultation either online or by calling us at (816) 972-3030.