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?)
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.)
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 security registrations, and, in some states, vehicle registrations. The majority of the states also now allow transfer-on-death real estate deeds, which take effect when you die.
To learn more about these types of accounts, registrations, and deeds, see Avoid Probate with Transfer-on-Death Accounts and Registrations.
Several forms of joint ownership provide a simple and easy way to avoid probate when the first owner dies. To take title with someone else in a way that will avoid probate, you 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. When one of the owners dies, the property goes to the other joint-owner—no probate involved.
You can avoid probate by owning property as follows:
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. And most gifts aren't subject to the federal gift tax. (There's more information about gift taxes in Estate and Gift Tax FAQ.)
Almost every state now offers shortcuts through probate—or a way around it completely—for "small estates." Each state defines that term differently. (For more information, see Avoid Probate: The Small Estate.)