There are a number of techniques which can be used to avoid the probate process. Some of these techniques may have significant potential problems. Here are a few of the techniques:
Use jointly-owned property with rights of survivorship. The probate process is avoided until there are no more joint owners surviving. The property is then exposed to the probate process. In the situation where your gross estate is in excess of the available unified credit the use of jointly-owned property may cause federal estate tax problems. Because of the “dangers” discussed in Section 3 above use of joint property might be the least advantageous way to avoid probate.
Use a Revocable Trust. Property which is titled in the name of the trustee is not exposed to the probate process. See other questions and answers which discuss revocable trusts in more detail. Note that a revocable trust only avoids probate for those assets titled in the name of the trust. Assets that remain in your individual name may still require a probate proceeding.
Name beneficiaries and provide for contingent beneficiaries for all life insurance policies and retirement plans, including IRAs. Life insurance policies and retirement plans all have provisions for naming beneficiaries when the insured or retirement plan owner dies. If the named beneficiary predeceases the insured or retirement plan owner, then the beneficiary usually becomes the probate estate of the insured or retirement plan owner. It is important to provide for contingent beneficiaries in all such situations.
Use “in trust for” or “pay on death” designations for bank accounts and stocks. Many assets can be titled in your name but with a designated beneficiary at your death. This avoids many of the problems associated with joint ownership but also avoids probate. A typical designation would read “John Jones in trust for Mary Able” or “John Jones I/T/F Mary Able.”