How Can I Avoid Probate?
Probate can be a daunting process. It is the legal procedure that is done by the Nevada courts to settle an estate after a person has died. While probate is intended to streamline the division of property and assets, it is not a perfect process.
It can be beneficial to try to avoid probate.
The process can be expensive because of court costs and estate taxes. It can also be confusing and time-consuming.
There are several ways that you can help your heirs avoid the probate process. These include making a living trust, having joint property ownership, or naming beneficiaries on specific accounts.
1. Living Trust
A trust is a legal entity that is created by a person, known as the trustor, that allows a third-party, known as the trustee, to manage the property or assets of the trustor for the benefit of a beneficiary. There are several types of trusts that can be created.
A living trust is similar to other trusts but with one major difference. Mainly, the trustor, also known as the grantor, is still alive when they make the agreement. This agreement allows the trustor to still benefit from the trust while alive but it also passes their assets on to their beneficiary when they pass away.
How does a living trust help avoid probate? In the most basic of terms, a living trust is similar to a last will and testament. However, you get to skip the line of waiting for a probate judge to make final decisions about property and assets.
The living will already specifies a named trustee who will take care of your estate and divide assets. They will also be in charge of all funeral costs and paying any debts through the trust.
In Nevada, living wills can be either revocable, meaning changeable, or irrevocable, meaning the terms of the agreement cannot be changed once they are made.
A lawyer can help determine which type of living will is best for you. It is generally best to transfer as many assets as possible into the trust to ensure that probate will not be needed.
2. Joint Property Ownership
Joint property ownership simply means that more than one person owns a piece of property. Nevada law allows for two types of two main types of joint ownership.
First, there is joint tenancy. This type of property ownership works well with married couples. When one spouse passes away, the other will inherit the property without going through the probate process.
The second type of joint ownership is community property with the right to survivorship. The key to avoiding probate with this type of ownership is to make sure that the property documents include the term “right to survivorship”.
If the property is jointly owned with the right to survivorship, then it will automatically pass to the other owner when one of the owners dies. While there may be some paperwork and time needed to show that one owner has passed away, the other owner will be able to gain full ownership of the property without going through probate.
3. Naming Beneficiaries
Another major way to avoid probate in Nevada is to name beneficiaries on accounts that allow for this type of asset protection. This type of security is beneficial for people who either do not own property or do not have a significant amount of assets to include in a living will. It is also more affordable and the documents to create a will and last testament are more straight forward than creating a trust.
If this is the case, then naming beneficiaries is a good way to have some, or even most, of your assets avoid the probate process. There are several types of accounts that allow a person to name a beneficiary when they are created, often in the forms of a “payable on death” or “transfer upon death” beneficiary assignments.
Examples of these types of accounts include:
- Bank accounts
- Retirement plans
- 401k plans
- IRA accounts
- Stocks and bonds
- Life insurance policies
- Pension plans
- Vehicle titles
- Real estate ownership
In Nevada, assets and property will not have to go through the probate process if they have a named beneficiary in one of the above accounts. This means that if you have a will, only some of your remaining assets may need probate. The other assets in these accounts are protected and will automatically pass to the beneficiary.
It is important to note that assigning a beneficiary too many of these accounts is something that must be proactively done. Many accounts do automatically assign spouses as the designated beneficiary. However, it is not a good idea to depend on this.
Rather, contact each account separately and ensure that the spouse is the beneficiary. Alternatively, if you do not have a spouse or do not want them to be the beneficiary, there will be some paperwork needed to assign the desired beneficiary.
4. Other Possible Ways to Avoid Probate
There are other ways to ensure that some of your property or assets avoid the probate process. One main way to do this is to issue a gift to a beneficiary. This can be done in the form of property. Before someone passes away, they can simply give a piece of property to someone. They can also gift money to beneficiaries to help avoid probate.
There are some drawbacks to gifts. Mainly, the gift-giver will have no say over the property or asset once it is given away. Also, there is a limit to the type of property or amount of money that can be gifted. If it exceeds a certain amount, it will more than likely be subject to federal gift taxes.
Another way to avoid probate is to use a Simple Affidavit to claim the property or assets or an estate. However, this can only be done with small estates. The process allows heirs or inheritors to completely skip the probate process. They simply fill out a short form and then must wait 40 days. If there are no objections, the estate is closed and the assets are passed on.
5. Talk to a Living Trust or Probate Attorney Today
Call for a free consultation and talk to one of our attorneys today to find out which method will work best for your family and financial situation.