Avoiding probate is often a goal of many estate planning clients. Clients might have had a bad experience with a previous probate administration. As a result, those clients may want to avoid probate if at all possible. Avoiding probate is possible and here are some ways to do so:
A trust: A trust is an agreement between the grantor (the client) and the trustee. The trustee agrees to hold property for the benefit of somebody. That “somebody” can be the grantor or a third party. Any property contained within the trust is considered non-probate property. Non-probate property does not go through a probate administration. In the case of property in a trust, at death, the property will be transferred outside of a probate administration to beneficiaries in accordance with the terms of the trust.
Paid on Death Account: The law in Indiana allows for financial institutions to set up paid on death accounts. This type of account allows account owners to designate who will receive the funds directly upon the death of the account owner. The law treats these accounts as non-probate property. Therefore, any property contained within a paid on death account will not subject a client to a probate administration.
Transfer on Death Deed: A transfer on death deed operates in the same manner as a paid on death account except that the transfer on death deed deals with real property instead of financial accounts. When a transfer on death deed is signed and recorded with the county recorder, it allows the real property, such as a house or a farm, to be transferred directly to beneficiaries designated within the transfer on death deed.
The law allows for other mechanisms to avoid probate, e.g. joint ownership, but the result is not always optimal. For instance, if a house is held jointly by a husband and wife, the house will not go through probate when the first spouse passes away. However, when the surviving spouse dies, then the house may become a probate asset. These three mechanisms are preferable mechanisms to avoid probate.