You have been probably warned before that you should plan your estate in such a way that it will allow your family to avoid probate proceedings. In the attempt to follow this advice many people make mistakes that can lead to even worse problems after death.
Sometimes, after the death of one spouse, the surviving spouse add a child’s name (or another relative) to their bank accounts, brokerage accounts, real property, and other assets thinking that this way they are giving control over such assets to another person and avoiding probate when they die.
Joint ownership seems like a solution, but it has several hidden traps that people may not see right away. When adding another person to your property, such person immediately becomes co-owner of the property (personal or real). If he or she is ever involved in a lawsuit, bankruptcy, or a divorce proceeding you will be in great risk of losing your property for good.
A simple way to deal with this is to designate people (i.e. beneficiaries) who will automatically inherit your bank accounts, real estate and other assets, or set up payable-on-death bank accounts. During your lifetime that person has no rights to the money and you retain all the rights to use the money, or even change the name of the person appointed.
Still, one of the most effective ways to avoid probate is to create a Trust where you can transfer almost all of your assets. Trusts are not going through probate and every asset that you keep in the trust will be automatically transferred into the name of the designated person. Once the Trust is established and signed the titles of all properties must be transferred into such Trust. This last step is crucial and a lot of people fail to do it. If you did not transfer your property into the trust – it simply will not work.
Making the wrong move can cause many legal and financial issues for you and your heirs. Speak to an experienced estate planning attorney to work out a unique plan for your estate that will allow you to preserve your property and distribute it in accordance with your wishes.