When a person dies, his or her property is known as that person's estate. A probate court oversees the administration of the estate, distributing the assets and paying off the debts. Unfortunately, the process of moving an estate through probate can be slow and difficult.
A living trust can be useful to keep some property free from the probate process. With a living trust, the grantor is the person who has set up the trust, the trustee who will manage the trust, and the beneficiary or beneficiaries will be part of the process. To keep the case out of probate, the grantor organizes the trust and transfers the property to the ownership of the trust. The trustee will oversee its handling. The beneficiary will use the property. With a living trust, there will be a successor who will take it over after the person dies. This avoids probate by shielding the person's assets as they will technically not own them.
Joint ownership is when the person who is formulating the estate plan and another individual will both take ownership of an asset to pass it to the other when the person dies. This is a tactic that married couples have. Joint tenancy with a right of survivorship is when the person dies and the other owner fills out a form with the property passing to them. In Texas, there must be a separate written agreement to establish joint ownership.
Converting accounts to be payable-on-death can be done without probate. With a retirement account, it is common that a beneficiary is designated when it is opened. A named beneficiary will then claim whatever is in the account after the person dies. Bank accounts can have a named beneficiary and many states allow there to be this type of conversion with investments.
Since there are a multitude of legal issues with the distribution of assets after a person dies, having a grasp on various factors that are often part of estate administration can avoid cost and confusion later. Discussing probate issues with an experienced lawyer can help to formulate a plan and craft tactics to avoid probate and have the assets transferred in the way the testator wants without fuss or complication.
Source: fool.com, "3 Ways to Keep Your Estate out of Probate," Wendy Connick, March 3, 2017