Probate requirements date back to ancient property laws, designed to ensure that when someone passes away, their debts get paid properly and the right people receive the assets in the deceased person’s estate. However, fulfilling all those requirements takes many months, and heirs or beneficiaries do not generally receive any property from the estate until most of the process is complete.
For this reason, it has become increasingly popular to develop estate plans designed to avoid the need for probate. The methods used vary according to the family situation, goals, and assets involved. To provide the best benefits for yourself and your loved ones, you should strategize with an estate planning attorney who can focus on the best way to obtain your objectives. However, here are some general tools we often combine when developing plans to avoid probate.
Understanding Probate in Maryland
Probate is the legal procedure through which a deceased person’s will is verified, the court grants the personal representative authority, debts are properly assessed and satisfied, and assets are distributed to heirs or designated beneficiaries. The personal representative may need to request authority from the court before taking various actions on behalf of the estate, and the need to follow specific procedures can delay the process of winding up the final affairs of the deceased person.
By preparing in advance, you can ensure that your assets are transferred to your loved ones outside of this process to avoid the delays and expense of probate.
Create a Revocable Living Trust
One of the most effective strategies to bypass Maryland probate is establishing a Revocable Living Trust. This flexible tool allows you to retain control over your assets during your lifetime, with the ability to alter or dissolve the trust as your circumstances or wishes change. Upon your passing, the trustee you’ve appointed pays your final bills without the need for court supervision, and the remaining assets in the trust are then transferred to your designated beneficiaries, circumventing the probate process entirely.
Title Property Jointly
Joint ownership with the right of survivorship is another method that enables a property to pass outside the probate process. With a right of survivorship, when one owner dies, that owner’s share of the property automatically passes to the other owner(s).
- Real Estate with Co-Ownership on the Deed: Properties owned jointly will automatically transfer to the surviving owner, eliminating the need for probate intervention.
- Vehicle with Co-Owners on the Title: The surviving owner takes full ownership.
- Joint Bank Accounts: Funds in jointly held bank accounts effortlessly pass to the remaining account holder.
It is important to ensure that co-ownership is structured properly. If the property is held as tenants in common without a right of survivorship, the deceased person’s share of the property becomes part of their estate and is distributed through the probate process. In addition, it is important to take care when establishing joint ownership because you give the other owner–and their creditors–full access to the property.
Designate Beneficiaries on Accounts
Financial accounts, including retirement and life insurance policies, allow you to designate beneficiaries directly. These designations enable these assets to bypass the probate process and go directly to the named individuals upon your death.
Maryland law also allows for transfer on death provisions for many property types, including real estate. The person designed to receive the property does not have control over it during your lifetime, which protects it from being taken by your beneficiaries’ creditors.
Gift Assets During Your Lifetime
Gifting assets while you’re alive is another method to diminish the size of your estate that might be subject to probate and estate tax. Maryland allows individuals to give up to unlimited recipients a certain amount per year without incurring gift tax. This reduces your taxable estate and allows you to see your loved ones enjoy your legacy. However, you must be cautious that in making gifts during your lifetime, you could be making yourself ineligible for Medicaid benefits should you need to enter a nursing home.
Regularly Review and Update Your Estate Plan
Circumstances change, and so should your estate plan. Regular reviews and updates in response to life’s milestones—marriages, births, divorces, and deaths—ensure that your estate planning documents reflect your current wishes and circumstances. Keeping your plan up-to-date is vital in avoiding probate, as outdated information can lead to unnecessary complications.
Chesapeake Wills and Trusts is Your Partner in Estate Planning
With the proper planning and strategies, you can ensure a smooth, efficient transfer of your assets to your loved ones without the delays and expense of probate. At Chesapeake Wills and Trusts, we’re committed to guiding you every step of the way, ensuring your peace of mind for the future. Call (410) 590-1900 or complete the online form to schedule a consultation. Let us help you secure your legacy and give your loved ones the care and knowledge they deserve.