Probate- Will Substitutes

A common concern among our clients is avoiding probate. It is expensive, time-consuming, and can cause a lot of family drama during an already stressful period of grief. A lot of clients believe setting up a will avoid probate; unfortunately, you will end up in probate with or without a will provided there is property that has to be transferred. In order to effectively avoid probate, or at least minimize it, you need to understand how it works.

Probate is the legal process required to transfer property that is still owned by a person after their death. It is public and can be expensive and time-consuming. There are other aspects of probate (such as guardianship and conservatorship), but for now we will focus only on how property is transferred. Probate only governs property that is in your name only at your death – if you own it jointly with someone else or designate a beneficiary probate will not be necessary.

All property owned through joint tenancy with another person will pass to the surviving owner(s) automatically. A death certificate is often required to remove the deceased joint tenant.

Note that there are other forms of joint ownership, such as tenants-in-common. Tenants-in-common interests do not transfer to the other owner(s) at your death. These interests will be governed by your will and trust provisions.

A beneficiary designation is a written designation of the person(s) to whom you would like to leave a specific asset. This is most common with life insurance policies, retirement accounts, and bank accounts. Just as with joint tenancy, a payable on death designation automatically transfers to the beneficiary without a legal process.

Both Kansas and Missouri allow a beneficiary deed; this allows you to own the property with no strings attached while you are alive, but the property will pass automatically to your beneficiary upon your death. This is also true for vehicle titles.

The most common way to avoid probate is to create a trust. A trust allows you to dictate how your property will be transferred and who will transfer it without going through probate. It also allows you to put parameters around distributions to your beneficiaries and it can last for years, even decades. These are often attractive options for clients with minor beneficiaries, those with beneficiaries who may not make smart financial decisions, and anyone who values privacy.

If you have beneficiaries that are established adults and capable of smart financial decisions, leaving your entire estate to them through joint tenancy or beneficiary designations may be an attractive option. However, there are numerous pitfalls with this approach, and it can be dangerous to choose this option without having a thorough discussion of your assets and the capabilities of your beneficiaries with an experienced estate planning attorney. If you would like help picking the best avenue, email us at info@weeselawfirm.com to set up a free consultation!