Probate or “probate administration,” is a legal process whereby the probate court oversees the settlement of your estate, ensuring that all interested parties are notified and have an opportunity to be part of the process. A thorough and accurate accounting of the estate is prepared and all final debts and tax obligations are satisfied.
The probate process can take a fair amount of time to complete and can be expensive. Also, additionally, any property that must go through probate can be tied up for many months or may be a few years.
So, how can you avoid probate?
The easiest way is by not owning the property. The probate process is only applicable to property that you own in your personal name. The property will not be a part of your estate if you gift assets while you are still alive or sell/transfer title to the property to your family. This property will be excluded from the probate process.
Another effective way to evade probate is to put your property into a trust. By doing this, you give up personal ownership of the property. The trust becomes the owner. Yet, one can let you stay in control of the property by naming you Trustee over the property. Since you no longer own the property, you don’t have to worry about it passing through probate. There are few rules with respect to the specific types of trusts. So, it would be a great idea to have all your work done by an experienced Real Estate Attorney.
Different states offer different ways to avoid probate. These options are available in New Jersey.
If you own property jointly with someone else, and this ownership includes the “right of survivor-ship” then the surviving owner automatically owns the property when the other owner dies. Probate will not be necessary to transfer the property.
Assets owned in joint tenancy automatically passes to the surviving owners when one owner dies. Probate is not necessary.
Payable-on-death designations for bank account
You can add a “payable-on-death” (POD) designation to the bank account. Still the control of all the money remains with you. The beneficiary can claim the money directly from the bank, without probate court proceedings at your death.
Transfer-on-death registration for securities
You can register stocks and bonds in transfer-on-death (TOD) form. If you register an account in TOD form, the beneficiary you name will inherit the account automatically at your death. In this case too no probate court proceedings will be necessary.