At some point or another, most adults have had at least some basic interaction with the probate process. Many have served as executors for a loved one’s estate. Others have been heirs waiting for months to receive their inheritance. It is not uncommon for those who have at least some familiarity with the process to have strong opinions about probate, with many finding the entire process slow, costly, and difficult to navigate. That may be part of the reason why so many people try so hard to do whatever they can to keep their estates out of probate when they die. If you want to avoid the Michigan probate process, there are a number of different avenues available to you.
Basic Rules for Avoiding Probate
It is helpful to understand one fundamental thing about probate avoidance: the easiest way to avoid probate is to have alternative ways for your assets to transfer ownership when your life ends. Since probate is nothing more than a legal process for identifying assets, settling debts, and distributing inheritance to heirs, you can avoid it by using tools that provide another mechanism for accomplishing that ownership transfer.
The Living Trust
Living trusts are all the rage right now, with estate planners and online companies pushing them as the ideal probate-beating planning tool for anyone looking to keep his or her estate out of the courthouse when they die. Of course, the idea that everyone needs a trust is just something salespeople say to close the deal. In reality, trusts are not everyone. That does not, however, change the simple fact that a living trust can be a great tool for many individuals and families.
The living trust can be used to help just about any type of asset avoid probate when you pass away. That includes common probate-subject assets like real estate properties and bank accounts, as well as things like cars, trucks, investments, and so on. To take advantage of a trust’s probate avoidance benefits, you simply create the trust, name a successor trustee to take control when you die, and list your beneficiaries and trust terms. As simple as that sounds, though, you still need an attorney’s help to ensure that you don’t make any costly mistakes.
It would be a mistake, however, to think that the trust is the only option available to you. Trusts can involve some upfront costs that many people with modest estate holdings might find too great to bear. So, while they might want to avoid probate for their heirs’ sake, they may not be ready to invest that sort of money into the creation of a living trust. For those individuals, there are a host of other options that can be used to affect a post-death transfer of ownership to your heirs.
Bank accounts that might otherwise be subject to probate can be protected from the process through the inclusion of an account payable-on-death designation. This allows your beneficiary to claim the money from the financial institution after you die, and negates the need for having the account pass through probate. Naturally, you retain all ownership rights throughout your life, and have no obligation to leave any of the money in the account. However, it is a great way to ensure that your account funds go to your designated heir when your life is over.
This designation is used for stocks, bonds, and other securities. It is accomplished by registering your brokerage account with a transfer on death beneficiary designation. With that designation in place, your beneficiary won’t have to deal with the probate court when you die, but can instead interact with the brokerage company to take ownership of your account.
Joint Tenancy and Tenancy by the Entirety
Another way to transfer property automatically is to utilize the joint ownership provisions available in Michigan. These include joint tenancy, in which the right of survivorship ensures that property owned by multiple owners automatically passes to the surviving tenant when one dies. Michigan rules on joint tenancy mandate equal shares of ownership between tenants. The other option involves tenancy by the entirety – a form of ownership that is used only for married couples. In fact, if you own a home, bank account, or other property with your spouse, Michigan law automatically recognizes that as tenancy by the entirety.
Simplified Probate for Small Estates
Michigan also offers a number of “shortcuts” for smaller estates that your heirs may be able to rely on if your assets are few and your estate is easy to settle. This can require an affidavit in some instances, or a simple written request from the executor in other cases. Certain asset and overall estate value limitations apply, of course. You can read more about the available options on nolo.com.
Do You Need to Avoid Probate?
Of course, you may also want to consider whether it is even necessary to avoid probate. If you have relatives that are sure to cause trouble for other family members after you die, you may just decide that having a judge supervising the distribution of your estate might not be such a bad thing after all. You might also have your life arranged in such a way that there will be little left to manage when you die. As with most things in life, the need to avoid probate is by no means absolute. Ultimately, your individual circumstances should dictate how you want to proceed on this important matter.
At Biddinger & Estelle, PC, our experienced estate planning attorneys can work with you to determine which options are best for your estate, and then assist you with the creation of the ideal estate plan for your needs. In a world where there’s no such thing as one-size-fits-all, it’s important to know that you can rely on legal professionals who understand that you deserve individualized solutions that match your unique circumstances. Contact us at our website or call us today at (989) 872-5601 to learn more about whether probate avoidance is right for you.
- What Is a Trust and How Can It Be Used as a Component of Your Estate Plan? - May 26, 2020
- Best Ways to Protect Your Business with Estate Planning - May 8, 2020
- What Should Prompt an Estate Plan Update? - May 5, 2020