How to Avoid Probate

Avoiding probate doesn't have to be difficult. Many people can use these simple and effective ways to ensure that all, or some, of their property passes directly to their heirs, without going through probate court. (To learn about probate and its downsides, see Why Avoid Probate?)

• Revocable Living Trust
• Pay-on-Death Accounts and Registrations
• Joint Ownership of Property
• Community Property Agreements
• Gifts
• Simplified Procedures for Small Estates

Revocable Living Trust

Living trusts were invented to let people make an end-run around probate. The advantage of holding your valuable property in trust is that after your death, the trust property is not part of your probate estate. (It is, however, counted as part of your estate for federal estate tax purposes.) That's because a trustee—not you as an individual—owns the trust property. After your death, the trustee can easily and quickly transfer the trust property to the family or friends you left it to, without probate. You specify in the trust document, which is similar to a will, whom you want to inherit the property. (To learn more about living trusts, read How Living Trusts Avoid Probate.)

Pay-on-Death Accounts and Registrations

You can convert your bank accounts and retirement accounts to payable-on-death accounts. You do this by filling out a simple form in which you list a beneficiary. When you die, the money goes directly to your beneficiary without going through probate. You can do the same for government bonds and stocks, bonds, and brokerage accounts.

Many states also allow transfer-on-death vehicle registrations, and the majority of the states also now allow transfer-on-death deeds for real estate. You can use these tools to transfer your cars and real estate to someone else after your death without probate.

To learn more about these types of accounts, registrations, and deeds, see Avoid Probate with Transfer-on-Death Accounts and Registrations.

Joint Ownership of Property

Several forms of joint ownership provide a simple and easy way to avoid probate when the first owner dies. When one owner dies, the property simply goes to the other joint-owner—no probate involved. To take title with someone else in a way that will avoid probate, you would state, on the paper that shows your ownership (a real estate deed, for example), how you want to hold title. Usually, no additional documents are needed.

You can avoid probate by owning property as follows:

• Joint tenancy with right of survivorship. Property owned in joint tenancy automatically passes, without probate, to the surviving owner(s) when one owner dies.
• Tenancy by the entirety. In some states, married couples often take title not in joint tenancy, but in "tenancy by the entirety" instead. It's very similar to joint tenancy, but can be used only by married couples (or in a few states, by same-sex partners who have registered with the state). Both avoid probate in exactly the same way.
• Community property with right of survivorship. If you are married (or in California, if you have registered with the state as domestic partners) and live or own property in Alaska, Arizona, California, Idaho, Nevada, Texas or Wisconsin, another way to co-own property with your spouse is available to you: community property with the right of survivorship. If you hold property in this way, when one spouse dies, the other automatically owns the asset. (To learn more, see Avoiding Probate with Joint Ownership.)

Community Property Agreements

In a few states (Alaska, Idaho, Texas, Washington, and Wisconsin), a married couple can sign an agreement that will determine what happens to some or all of their property at death. Usually, couples use these agreements to declare all of their property to be community property, and then leave it to the survivor, without probate, when one spouse dies. The agreement functions much like a will—with the important difference that the property doesn't have to go through probate when the first spouse dies.

Different states have different rules about what makes community property agreements valid. If you want to create a community property agreement, be sure to check your state's current rules.

Another reason for caution is that these agreements are binding contracts. Neither spouse can, acting alone, change or revoke them. (By contrast, you can always revoke your will.) Generally, the only ways to revoke a community property agreement are to:

• agree to cancel (rescind) the agreement
• divorce, or
• separate permanently.

Gifts

Giving away property while you're alive helps you avoid probate for a very simple reason: If you don't own it when you die, it doesn't have to go through probate. That lowers probate costs because, as a general rule, the higher the monetary value of the assets that go through probate, the higher the expense.

In 2023, you can give away $17,000 per person without filing a gift tax return. (There's more information about gift taxes in Estate and Gift Tax FAQ.)

Simplified Procedures for Small Estates

Almost every state now offers shortcuts through probate—or a way around it completely—for "small estates." Each state defines that term differently, but essentially, estates that are especially simple or small in value can skip probate or go through streamlined probate. If you think your estate will qualify, you may not need to take elaborate measures to avoid probate. (For more information, see Avoid Probate: The Small Estate.)