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How to Avoid Probate

Most people want to avoid probate when they are planning their estate. But often, probate may be guaranteed, by using the wrong documents.

In order to avoid probate, it is essential that you understand what probate is and how an estate ends up in probate.

In simple terms, probate is the process of, among other things, determining heirship to your assets upon your death. This is a court process that may be entirely avoidable, if only you knew how to avoid it.

• See also: Probate and Trust Administration

The only time you really need to go through probate is when your assets are in your individual name with no beneficiary or joint owner. If it can be determined who is entitled to an asset by locating surviving joint owners or designated beneficiaries, there is no need for probate. When you cannot tell from the title to an asset who is to receive it upon your death, then probate may be needed to make that determination.

There are ways to avoid probate, even in that situation, by using a small estates affidavit. In Arizona, effective September 13, 2013, this can be done when the cumulative value of your personal property (less liens and encumbrances) is less than $75,000 and your real estate (less liens and encumbrances) is valued under $100,000.

Beneficiary designations are commonly found on life insurance contracts, annuity contracts and retirement plans. But they may also be found on nearly every type of bank account, investment product or security investment. Even real estate can have a beneficiary, utilizing a beneficiary deed.

Absent the beneficiary designation or a joint surviving owner of an account, probate may be the only way to establish who the heirs are for that asset. How does a court decide who the proper heir should be?

First, the court will consider who you designated as heirs in your Last Will and Testament. If there is no Will, then the court will refer to state law to make that determination. Another way to avoid probate is to have assets titled in the name of a revocable living trust. Since a trust "survives" your death, it will serve as a testamentary document, much like a will, that designates who your heirs will be.

One big difference between a will and a trust is that a trust does not require going through the probate process. A Last Will and Testament, on the other hand, must pass through probate to become an effective instrument (unless the small estates procedure is available).

Keep in mind that a Will does not avoid probate. Also keep in mind that a revocable trust will not prevent that outcome either, unless you have properly transferred titles to appropriate assets to the name of your trust.