How to Avoid Probate and Attorney Fees by Not Writing a Last Will and Testament
Probate is the set of laws a court uses to interpret wills. So to avoid probate, you must simply not create a will. In absence of a will, intestacy laws apply. Intestacy establishes how a decedent's property is distributed. Distributions of property are based on who you are related to, such as your parents, spouse or children. The downside of intestacy is that it does not give you the ability to choose to whom your property will be bequeathed. You can avoid probate and still decide who your property goes to, though.
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Instructions
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Determine who you want to leave your property to and how much property you will need for the rest of your life. To avoid probate and still determine who will receive your property after death, you will have to make significant transfers of your property during your life. This requires significant reflection as to how to do this. For example, you will probably want to retain your house as you will need somewhere to live, but you might want to consider giving an important collection of art to your designated heir because it is not necessary for you to maintain your standard of life.
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Transfer all property you do not need to retain as gifts. If you transfer significant amounts of property, you may have to pay gift tax on the transfers. You can give each person up to $13,000 a year in gifts; any value given beyond that amount is taxed.
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Enter into joint tenancy arrangements for property you want to transfer to specific individuals but want to retain for personal use. Joint tenancy is a type of ownership where two or more people share the rights to property. The benefit to this type of ownership in this situation is that upon the death of a co-owner, the surviving owner gains sole control of the entire property without restriction. By entering into a joint tenancy, you can continue to use the property that you need during your life, but after you die your property will automatically go to the individuals you have chosen. If you do enter into a joint tenancy, but you do not receive any compensation from the new co-owner, that is considered a gift for tax purposes and you will have to treat the transaction accordingly.
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Tips & Warnings
While you may want to avoid attorney fees, when entering into joint tenancy arrangements consult with a local attorney to ensure compliance with state law. Also, consult with a certified public accountant when calculating and filing your gift tax return. While every effort was made to ensure this article's accuracy, it is not intended to be legal advice.
