Most people have heard it’s smart to avoid probate — but not everyone fully understands why. While going through probate court isn’t necessarily bad as it can help ensure a fair distribution of your assets, it can be slow and costly. And many families find the process burdensome during an already difficult time.
A Will Alone Doesn’t Avoid Probate
A common misconception is that having a will keeps your estate out of probate. It doesn’t. While a will outlines how your assets should be distributed, it’s the probate process that legally validates the will and distributes those assets. Probate is typically required if you have a will and your estate’s assets are not held in a way that allows for direct transfer to beneficiaries — like beneficiary designations or a trust.
A will is a document that states a person’s final wishes on how their property should be handled. A will decides which family members and heirs receive any money or property left in the estate. Think of a will as your written instructions for how you’d like your assets distributed, but it has no legal authority until a probate judge approves it.
Beneficiary Designations Can Bypass Probate
When a beneficiary is named on an asset like a life insurance policy, retirement account (IRA, 401k), or bank accounts with a Payable on Death (POD) designation, the asset is directly transferred to the beneficiary upon the account holder’s death without going through probate.
It’s important to note that these beneficiary designations can take precedence over wills when it comes to the distribution of specific assets — life insurance, retirement accounts, and other financial accounts. This means that if a beneficiary is named on a life insurance policy or a retirement account, the funds will be paid to that beneficiary, even if the will states otherwise.
How Trusts Help Avoid Probate
One of the most effective ways to avoid probate is by creating a trust. Unlike a will, a trust allows your assets to be transferred directly to your beneficiaries without court supervision.
Living trusts, in fact, have great value as part of estate planning, but not only to avoid probate. A living trust, if properly prepared and administered, can be a very effective tool to manage assets in the event of illness, disability or the effects of aging.
And unlike a will, which only takes effect after death, a trust is active during your lifetime. That means it can step in if you become incapacitated, giving your family clarity and legal authority for how to act when it matters most. The use of a living trust to minimize the risk of elder financial abuse and address similar issues, should be an important consideration in an estate plan.
Take the First Step Toward a Stronger Estate Plan
Setting up a trust doesn’t have to be complicated. With the right guidance, you can protect your family and ensure your wishes are followed — without court delays. At HH&J, we offer a free consultation to help you understand your options and build an estate plan that works for you. Let’s make sure your legacy is protected.