Probate is a legal process that occurs after an individual’s death to ensure the distribution of their assets according to their will. While it can be a necessary process for some, it can also be time-consuming, expensive, and emotionally taxing for the surviving family members.
In New York, avoiding probate is possible with careful planning and the appropriate legal measures. In this guide, we will explore various strategies for avoiding probate in New York.
Create a Revocable Living Trust
A revocable living trust is a legal entity that holds your assets during your lifetime and transfers them to your designated beneficiaries after your death, bypassing probate. To create a revocable living trust, you’ll need to:
- Draft a trust document, outlining the terms and conditions.
- Transfer your assets (e.g., real estate, bank accounts, investments) into the trust.
- Appoint a trustee to manage the trust (you can serve as the initial trustee during your lifetime).
Upon your death, the successor trustee will distribute the trust’s assets to the named beneficiaries without the need for probate.
Joint Ownership with Right of Survivorship
Holding property jointly with another person with the right of survivorship ensures that upon your death, the property will pass directly to the surviving owner(s) without going through probate. In New York, there are two forms of joint ownership that offer right of survivorship:
- Joint tenancy: All joint tenants have equal ownership rights and shares in the property. Upon the death of one owner, the property passes to the surviving joint tenants.
- Tenancy by the entirety: This form of joint ownership is available only to married couples. Similar to joint tenancy, the surviving spouse will inherit the property without probate.
Designate Beneficiaries for Financial Accounts and Life Insurance
Most financial accounts and life insurance policies allow you to name beneficiaries who will inherit the account or policy proceeds directly upon your death, avoiding probate. These accounts include:
- Bank accounts: Utilize payable-on-death (POD) designations to name beneficiaries for your bank accounts.
- Investment accounts: Assign transfer-on-death (TOD) designations to your brokerage and investment accounts.
- Retirement accounts: Name beneficiaries for your Individual Retirement Accounts (IRAs), 401(k)s, and other retirement plans.
- Life insurance policies: Ensure that you have designated beneficiaries for your life insurance policies.
Gift Assets During Your Lifetime
Another way to avoid probate is to transfer assets to your intended beneficiaries while you are still alive. Gifting assets can reduce the size of your estate and, consequently, the amount subject to probate. However, it is essential to be aware of potential tax implications and consult with a financial advisor before gifting significant assets.
Utilize Small Estate Affidavit Procedures
In New York, estates valued below a certain threshold can avoid probate through the small estate affidavit procedure. If the deceased individual’s assets are valued below this limit and meet specific criteria, heirs or beneficiaries can claim the property by submitting a small estate affidavit. Check the current threshold and eligibility requirements with a New York estate planning attorney or your local Surrogate’s Court.
By planning ahead and utilizing these strategies, you can minimize or avoid the probate process in New York, saving your loved ones time, money, and emotional stress. Consulting with an experienced estate planning attorney is essential to ensure your plan is tailored to your unique needs and complies with New York laws