When someone passes away, probate becomes the process in which an estate opens, and the court oversees the directive in a will. Probate in New Jersey courts could be a straightforward process, but things may take time. Beneficiaries may suffer through additional costs when dealing with probate, adding to the stress after a loved one dies. To help them, those who are engaged in planning their estates might find it valuable to explore ways to avoid probate.
Probate is not always necessary
Probate becomes necessary when solely-owned assets must transfer from the deceased to a beneficiary under a will. A house in one person’s name would be a “solely-owned” asset, but a home bearing two owners’ names on the deed is jointly held. If the deed stipulates “joint tenants with rights of survivorship,” the house passes from the deceased to the surviving owner. The property would not be subject to probate.
Similarly, a jointly-held financial account would transfer to the surviving owner. Those wishing to avoid probate might find establishing joint ownership with financial accounts a common way to do so. Real estate could be more complex, though. When giving half a home as a gift, there could be significant tax consequences. That’s something to consider during the estate planning process.
Other steps to avoid probate
Jointly-held financial accounts mean both account holders have 100% access to the funds. Some may find it better to employ “transfer of death” designations rather than give someone joint ownership. With TOD terms, the account holder names a beneficiary who receives the account when the owner dies.
Giving property away as gifts during one’s lifetime is an option, but there are tax concerns involved, although some exemptions may apply. Perhaps a revocable living trust is worth exploring, although a trust comes with several responsibilities and additional costs.