When a person in Michigan dies with a will, that will must go through the probate process before the heirs can receive their inheritance. Probate is also necessary if a person dies without a will. Probate can be time-consuming, costly and the probate proceedings become part of the public record. However, there are ways to pass on assets other than through a will that avoid probate altogether.
One way to avoid probate is to give away your assets to your heirs before you die. This can reduce the size of your estate, meaning that fewer assets must be probated. Gifting assets can also have a positive impact on future estate taxes, if they would apply to you.
Trusts have the advantage of passing on property to your loved ones without having to go through probate. This is because when you create a trust, you fund it with assets from your estate. This means that upon your death, the assets are held in the trust rather than by you personally. Trusts are overseen and controlled by a trustee and the trustee is obligated to follow the terms of the trust upon your death.
Accounts payable upon death
Certain types of financial accounts can be designated as payable on death. This means you can name a beneficiary to these accounts. The funds in the account will then go directly to the beneficiary upon your death, avoiding probate altogether.
Certain assets such as a home or vehicles can have joint owners on the title. If so, when one partner dies, the other partner automatically receives the asset, and the asset is not probated. Some ways to jointly own an asset is through joint tenancy with right of survivorship, community property with right of survivorship or tenancy by the entirety.
These are only four ways you can avoid probate; there may be other options not discussed here. It is important to understand all your estate planning options so you can make decisions that are in the best interests of you and your loved ones.