Overview
A will does not avoid probate, though there exists a common misconception that it does. In fact, a will is a tool that is often used during the probate process to direct how assets are distributed upon death.
Many people mistakenly believe that simply having a will allows assets to pass outside of probate court, but a will has no power outside of probate. Without a broader estate plan, a will generally must be administered in the probate courts.
For those who seek to avoid probate, it is important to understand the difference between a will and probate and the estate planning tools that exist to create a plan that reflects your goals and wishes.
How Does a Will Work?
A will is a document used after your death to control the distribution of your assets―namely, who is to receive those assets and who is in charge of distributing them. If you have minor children, a will can also nominate a guardian to care for them. However, this document is only effective within the context of probate. The court ensures that the instructions left in the will are followed by the appointed personal representative. It is also only effective after death.
Moreover, a will only has the power to transfer certain types of assets. Taxable financial accounts in the name of an individual generally are controlled by a will. Tax-deferred accounts—such as 401(k)s, IRAs, and taxable accounts with a payable-upon-death beneficiary—pass free of probate upon one’s death. Additionally, jointly titled accounts pass from one joint owner to the other upon the first person’s death, immune to the probate courts. In a similar, fashion, real estate held in joint tenancy by two or more individuals, or in tenancy by the entirety by a married couple, automatically are transferred to the survivor upon the first person’s passing.
What Is Probate?
Probate is the legal process by which title to property is transferred to heirs by the court. In short, when you die, your property and accounts need to be transferred to the appropriate beneficiaries.
Some assets can transfer automatically without probate. For example, if a titled asset has a living beneficiary named to receive it via a payable-on-death designation, that asset passes to the beneficiary directly. However, if an asset does not have a living beneficiary listed, the probate court needs to oversee its transfer to the rightful person.
Probate also provides a formal process for settling a person’s affairs. It requires a published notice of your passing in the newspaper, which allows creditors to file claims and the court to oversee the distribution of your assets. If you have a will, your assets will be distributed according to your instructions. If you do not have a will, your assets will be distributed according to state law.
In other words, your will serves as a roadmap that guides the probate process and directs how probate assets should be distributed. The time and expense of probate is something most people want to avoid. However, future probate administration ensures transparency among beneficiaries and the certainty of a statutory cutoff date to any unknown creditor claims.
How to Avoid Probate
One of the most effective estate planning tools for those looking to avoid probate is a revocable living trust. This type of trust allows you to maintain total control over your assets while you are alive and capable. You can control how your assets are used if you are incapacitated as well.
As with a will, a revocable trust allows you to decide who receives your assets and under what circumstances. Distributions may be made upon your death, at a later date, or made in multiple stages. Unlike a will, a revocable trust allows assets to be administered outside of probate, which provides benefits such as:
- A faster, more efficient transfer of assets to beneficiaries,
- The ability to avoid transferring title more than once,
- Opportunities for additional asset protection.
Trust-based planning also offers greater privacy. Probate proceedings are generally a matter of public record, meaning the terms of a will and information about an estate may be accessible to the public. By contrast, trusts are typically administered privately, with information shared only among trustees, beneficiaries, and other necessary parties.
A will remains an important estate planning document, but it generally does not avoid probate on its own. If avoiding probate is one of your estate planning goals, other tools such as revocable living trusts help streamline the transfer of assets. An experienced estate planning attorney can help you determine which strategies are best suited to your family's needs.
