Movies and TV have us believing that when someone dies, the will is immediately read, and heirs receive their inheritance. That’s not how it happens in the real world. It can sometimes take up to a year for an estate to go through the probate process before disbursing the estate’s proceeds.
But is probate necessary?
The probate process
Probate is the legal process that occurs after someone passes away. It involves:
- Validating the will
- Inventorying the estate’s assets
- Using the assets to pay off the deceased’s debts
- Filing the final tax return
- Distributing the assets to the beneficiaries
- Providing a report to the probate court of expenses and distributions
Many people prefer that their estate bypasses the probate process due to the following:
- Probate records are available to the public, meaning anyone can view the distribution of the estate’s assets.
- The process can take months, depending on the estate’s complexity.
- Probate can become expensive with court and attorney fees.
Fortunately, there are estate planning tools available to help avoid probate.
A trust is an effective method for avoiding probate. During your lifetime, you transfer ownership of your assets into a trust managed by a neutral party. You still have access to and use of the assets, but they go directly to your beneficiaries after your death.
Joint ownership with the right of survivorship is often used for bank accounts and real estate. Two or more people own the assets. Those assets are automatically transferred to the surviving owners when one dies.
North Dakota allows you to have Payable-on-Death accounts (POD) and Transfer-on-Death deeds (TOD). POD bank accounts will enable you to name a beneficiary. You have total control of the account while you’re alive, but the funds go directly to your beneficiary when you die. TOD deeds work much the same way but are for real estate.
Early planning is crucial if you wish for your estate to bypass probate. You will want to work with someone who can review your goals and help you create an estate plan that avoids probate but complies with state laws.