One of the goals many have for estate planning is avoiding probate, the legal process that ‘settles’ the estate of a deceased person. Not only can probate be time consuming, but it can involve fees and appearances.
There is a tried and true estate planning tool that is used to avoid probate, and you may have already done it and didn’t even realize it. How your property is titled, the form of ownership, can determine whether property avoids probate. The common ownership forms include:
Joint Tenancy: Avoids Probate
Joint tenancy is the most popular way to avoid probate, as the property automatically passes to the surviving owner when one owner dies.
Tenancy by the Entirety: Avoids Probate
Not a choice that is available in all states, but some states do allow tenancy by the entirety. This ownership form is limited to married couples only, and is quite similar to joint tenancy. Not only does it avoid probate, but it also offers a form of asset protection, as creditors usually cannot come after the indebted spouse’s portion of the property, which can occur with joint ownership.
Tenancy in Common – Does not Avoid Probate
A tenancy in common is a form of ownership of property, normally real estate, with another person where there is no right of survivorship specified. An interest in property held as tenancy in common passes by will and thus does not avoid probate.
It is difficult to fathom that a decision made early in adulthood, such as purchasing a home, impacts your property and probate upon your death. Estate planning reviews property ownership and more to determine how best to manage your assets later in life and provide for the smooth transition upon your passing. An estate planning attorney can advise you on the best forms of ownership for your specific situation and goals.