Many assets go through probate after a person passes away. Their estate plan helps to guide this process. The estate executor inventories the assets, handles debts or taxes, distributes assets to beneficiaries and much more.
But it is also possible to keep some assets out of probate. There are many potential tactics, depending on your specific situation, but two possible options are listed below.
Giving gifts in advance
First and foremost, you can give gifts to intended beneficiaries in advance, long before you pass away. Many people do this not just to keep those assets out of probate, but to reduce the estate tax burden.
It is important to note that, for the gift to not count for estate tax purposes, it must be given three years before someone passes away. So if a person gave away all of their assets six months before they died, those assets would still count toward estate taxes under New York law. But if they gave away assets three or more years before passing away, those assets would not count – and would not have to go through probate.
Using a payable on death (POD) account
Another option is to set up a beneficiary for a bank account, making it a payable-on-death account. You still retain access to the account and control over it while you are alive. But when you pass away, the beneficiary then takes over and owns that account. Because they were already listed, the POD account does not need to be part of your estate plan and also would not go through probate.
Exploring your legal options
These are just two options of many that you may want to consider. Be sure you know what legal steps you can take when creating an estate plan and addressing probate.