When a loved one dies, their estate must go through probate in order to be distributed to their heirs. This process can be lengthy and expensive, and often leaves the family members fighting over who gets what. There are several ways to avoid probate in Massachusetts, and in this blog post we will discuss them all!
Create a Living Trust
One of the best ways to avoid probate is to create a living trust. This type of trust can be created during your lifetime, and names a trustee who will manage your assets after you die. This is called a “successor trustee” and it can be anyone of your choosing, such as a family member or friend. When you create a living trust, you must transfer all of your assets into the trust. This includes your bank accounts, investment accounts, real estate, and personal property. Once everything is transferred into the trust, it will not have to go through probate because the trustee will already have control over it. After you establish the trust, you’ll need to transfer ownership of your property to yourself as trustee. From that point on, the terms of the trust will dictate how the property is managed.
Name a Beneficiary on Your Assets
Another way to avoid probate is to name a beneficiary on your assets. This means that when you die, your assets will go directly to the person you have named as the beneficiary. For example, if you have a life insurance policy or retirement account, you can name a beneficiary who will receive those assets upon your death.
You may also make a payable-on-death (POD) designation on bank accounts such as savings accounts or certificates of deposits. You maintain complete control over the money in the account—the person designated as your POD beneficiary has no claim to the cash and you can spend it all if you want. The money can be claimed directly from the bank without going through probate court proceedings by the beneficiary at your death.
Transfer Property During Your Lifetime
If you transfer property during your lifetime, it will not have to go through probate after you die. You can do this by giving the property to a family member or friend, or by selling it and using the proceeds to purchase another asset. Just be sure that you transfer the property before you die, as any property that is in your name at the time of your death will. Much like estate planning which can save your family unwanted taxes, consider transferring or selling property ahead of time.
Create a Joint Account
Another way to avoid probate is by owning property jointly with someone else. This can be done through joint tenancy or tenancy by the entirety. Joint tenancy means that each owner has an undivided interest in the property and that upon the death of one owner, the other owner automatically becomes the sole owner of the property. Tenancy by the entirety is similar, but it can only be used by married couples. With this type of ownership, both spouses must die before the property passes to their heirs.
Gift Your Assets
You can also avoid probate by gifting your assets to your heirs or beneficiaries while you are still alive. You can give each one up to $14,000 per year without incurring any gift taxes. If you are married, you and your spouse can each give $14,000, for a total of $28,000 per year. You can also give larger gifts, but you will need to file a gift tax return.
Avoid Probate in Massachusetts with Dowley Law
By taking these steps, you can avoid probate in Massachusetts and make sure that your assets are distributed according to your wishes. Probate can be a long and expensive process, so it’s best to avoid it if you can. Talk to one of our financial advisors or estate planning attorneys to find out more about how you can keep your assets out of probate.