Going through probate in California can be expensive. Knowing it’s coming allows you to prepare and save the most money possible by avoiding unnecessary costs. Understanding these tactics and using them to your advantage can be highly beneficial.
Transferring property to a trust
Bypassing the probate process to save money can be completed by transferring property to a trust. Doing so passes the property directly to your beneficiaries. This action can be done by creating a trust document and then transferring the property title to the trust.
Using tax-free gifts
Lowering your probate costs can also be completed by making gifts before you die. In 2020 and 2021, you could gift your heirs up to $15,000 per person yearly and not incur a gift tax penalty.
Setting up a payable on death registration
Another method you can use to avoid the probate process is by setting up a payable on death (POD) registration. Upon your death, your bank account or retirement account will transfer to a designated beneficiary without the need for probate. Completing a few forms at the institution you’re using for the account is usually all that’s required to put it in place.
Using joint ownership
Giving up half ownership of your property by utilizing joint ownership is another method you can use to bypass the probate process. With this method, the property’s title automatically passes to the joint survivor when you die.
Confirm your beneficiaries
Ensuring you have the correct beneficiaries by confirming them is also essential to avoid the probate process. Forgetting to change beneficiaries after getting remarried is easy to do when you get busy. Updating beneficiaries on your life insurance policies 401(k)s and other retirement accounts is crucial to safeguard from this problem.
Taking the time to explore other ways to avoid the probate process can help save you money in the long run.