Avoiding Probate – The Basics

Avoiding Probate – The Basics

By Atty. Christopher J. Koppes | July 13, 2017

Estate planning specialists often face clients with the following question:   “How can I avoid probate?”

My first response is, should you?  Probate does have certain disadvantages, including expense (roughly $1,000 - $1,500+ depending upon the complexity of the estate), lack of confidentiality (probate filings are typically public record), and lengthily wait times for beneficiaries (approximately 6 months to a year before distributions are made).  However, the formalities of the probate process can be advantageous, in some circumstances where increased Court oversight might avoid conflicts.  The question of whether probate avoidance is good for you is ultimately very individualized, and should be discussed in more detail with your estate planning specialist.

If probate avoidance is desired, there are several strategies estate planners can employ to help achieve that goal.  The key is to make arrangements for non-probate transfers to reduce a person’s wealth to less than or equal to $50,000.  If accomplished, the transfer of any remaining wealth less than or equal to $50,000 can be completed by a simple Transfer by Affidavit procedure.  See generally Wis. Stat. §867.03.

Non-probate transfers can take many forms.  One very common means of non-probate transfer is a contractual beneficiary designation (e.g. Payable-on-Death and Transfer-on-Death designation).  Such designations are typically a simple form to fill out at the institution managing the asset which designates a beneficiary in the event the account holder passes away.   Another common means of non-probate transfer is holding title in a way that allows your interest in the asset to pass to the remaining joint title owner(s) following your death.

Perhaps the simplest way to understand non-probate transfers is with an example.   Consider the following assets held by the hypothetical Jane Smith, a married woman:

Residence:                   $200,000 value.  Held in joint tenancy with her husband John Smith.

Checking Account:     $50,000 value.  Held in joint tenancy with her husband John Smith.

Savings Account:        $10,000 value.  Held in joint tenancy with her husband John Smith.

IRA Account:             $250,000 value.  Payable on death designation to husband John Smith.

At first glance, Jane’s assents would appear to be well above the $50,000 threshold for the simple Transfer by Affidavit procedure.  However, each asset has been managed to provide for non-probate transfer upon her death to her husband John.  The wealth subject to probate administration is actually $0, and her careful planning allows her to avoid probate.  Of course, the above discussion is very simplified, and care should be taken to ensure the estate plan you have selected is the best means to achieve your goals.

As a parting thought, the creation of a trust can be another powerful way to create an estate plan that accomplishes your objectives while avoiding probate.  Trusts are typically more complex and can involve more upfront cost for clients, and may be right for some clients but not others.  Again, a candid discussion with your estate planning specialist can help to determine whether a trust, working in conjunction with other planning strategies, may be the best fit for your individual needs.

If you have any questions on avoiding probate or estate planning, it may be time to schedule a confidential consultation with the team at Bender, Levi, Larson & Associates S.C.  We specialize in estate planning and can counsel you on strategies to achieve your individual goals.  Schedule a meeting with us today!