How to Avoid Probate

It’s important to think about what will happen to your assets after you die, but many people don’t talk about it or prepare for it. According to a recent Gallup poll, slightly less than half of adults in the United States have a will that sets forth how their assets will be distributed. Absent a legally valid will, the distribution of your assets will be decided by a state legal scheme that may be totally at odds with your desires. 

In New York, assets held by you alone will pass by one of three methods:

• Probate, if you have a will
• Intestacy, if you do not have a will
• Small Estate rules, if you have no real estate and your assets are worth $50,000 or less. 

Probate – Every county in New York State has a Surrogate’s Court that is responsible for administering wills and confirming the appointment of an executor. In the probate process, the executor must file with the Surrogate’s Court the original will and a copy of the death certificate, along with the probate petition and other supporting documentation. The executor must also file notice that the estate is in probate. Other duties of the executor include inventorying the decedent’s assets, paying outstanding debts and taxes, and distributing the remaining property to beneficiaries as identified in the will. 

Intestacy – If you do not have a will, or your will is invalid, your estate will pass by the laws of intestate succession. If you are a New York resident, the Surrogate’s Court will appoint an administrator for your estate. The court will choose an administrator based upon the same rules it uses to distribute assets in an intestate situation. Under New York intestacy laws, if a person dies without a will, a surviving spouse inherits the entire estate if there are no children or other descendants. If there are other descendants, the surviving spouse gets the first $50,000, and the balance is divided 50% to the surviving spouse and 50% to the surviving descendants. If there are no descendants and no spouse, the estate passes to the decedent’s parents. There are several other identified heirs-in-law in this intestate succession scheme. Without any identifiable heirs-at-law, an estate may pass, or “escheat,” to the state. 

Small Estate – If you have a small estate, which is defined in New York as an estate with no real estate and assets that are worth $50,000 or less, it will be handled as a small estate matter without court administration. It’s possible for your loved ones to deal with this as a do-it-yourself matter, and there are small estate affidavits available at many banks and financial institutions and on the internet. 

Avoiding Probate

Many people with valid wills desire to avoid probate. There are a number of reasons for this, including the following

• Probate is slow. It is an official legal process and can take months and even years in the event of large, complex, or disputed situations. 
• Probate can be expensive. Debts and taxes can reduce the value of an estate, but so too can the probate process due to legal and court fees. This diverts money from the estate and the beneficiaries.
• Probate is not private. It’s a public process, so anyone can access the details of the will and the estate administration. 
• Probate can create the opportunity for litigation. In many cases, probate is a long, protracted process and can provide ample grounds for disaffected heirs who were not named as beneficiaries. Similarly, beneficiaries may feel they were treated unfairly and dispute their distribution. 
• Probate can create multi-state complications for people who own property in more than one state. In this case, so-called ancillary proceedings can add another layer of complexity to probate.

If probate sounds like something you would like to avoid, a Long Island probate and estate administration lawyer can advise you on the methods to do so. These include:

• Trusts – Trusts are one of the most common ways to avoid probate. When you create a trust, you transfer some or all of your assets to the trust to be held and managed by a trustee for the benefit of a third-party beneficiary. Trusts, both revocable and irrevocable, operate outside the probate system. This allows your beneficiaries to receive your assets immediately upon your death. Revocable trusts, which can be altered and, as the name suggests, even revoked, represent one of the most effective and comprehensive probate avoidance strategies. Trusts avoid probate because the trust entity doesn’t die when the person does. Instead, a chosen trustee distributes assets according to the decedent’s instructions and without court oversight. 
• Joint Ownership – A popular strategy for avoiding probate is to hold assets jointly, particularly real estate. Property owned in a joint tenancy with a right of survivorship automatically passes to the other party, avoiding probate. Real estate, bank accounts, and other assets can be titled jointly with a right of survivorship.
• Pay-On-Death or Transfer-On-Death Designations – Many states allow for pay-on-death (POD) or transfer-on-death (TOD) designations for beneficiaries for bank accounts, investment accounts, certificates of deposit, life insurance, etc. An advantage of these POD and TOD designations is that they do not require joint ownership of these accounts during the grantor’s life. Setting up these designations generally requires only completing simple forms with beneficiary information.
• Strategic Lifetime Gifting – Strategic lifetime gifting can reduce the probate estate by transferring assets to beneficiaries while the grantor is still alive. Gifted assets no longer belong to the estate, so they will not be probated. 

Contact Davidow, Davidow, Siegel & Stern, LLP

Here at Davidow, Davidow, Siegel & Stern, we know that losing a loved one can be very difficult, full of grief and sadness. But being prepared with a well-thought-out estate plan can help ease the immediate challenges of dealing with death. We have many years of experience helping families with estate plans, probate, and estate administration. Contact us today to see how we can help you. 

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