How to Minimize Probate Court Involvement with Estate Planning

When you pass away, you don’t want the Connecticut probate court standing between your family and your assets. Using thoughtful financial strategies while you are alive can help to minimize probate court involvement with estate planning. This will make it easier for your loved ones to resolve your estate after you die, and avoid paying costly court costs along the way.

Why You Want to Minimize Probate Court Involvement

Many people don’t walk into an estate planning attorney’s office with the goal of minimizing or avoiding probate. But they should. The time, expense, and frustration families experience in going through the formal probate process after a loved one dies can make it hard to grieve, and keep families from accessing assets they need to move on. Taking steps to reduce the size of your probate estate can help your family streamline the process and resolve matters more quickly and easily after you pass away.

The Connecticut probate process can be lengthy, confusing, time consuming, and expensive. There are probate court fees to be paid, inventories to be completed, letters of administration to be obtained, and in some cases, estate taxes to be satisfied before beneficiaries and heirs can receive their inheritance. The larger your probate estate is, the more probate court will cost. The probate process can also take months, sometimes years. Many people don’t realize how much more of their money could be passed on to their loved ones if they simply took the time to minimize probate court involvement through estate planning during their lifetime.

Ways to Avoid Probate Court in Connecticut

Connecticut allows the settlement of “small estates” without the court “probating” the will or issuing letters of administration. However, to minimize probate court involvement you will need to reduce the size of your probate estate to less than $40,000 and own no solely-owned real property at the time of your death. That doesn’t mean you need to sell or spend down your assets, though. There are many tools estate planning attorneys can use to reduce the portion of your estate that must go through probate, so your family can take advantage of this small estate process.

Create a Revocable Living Trust

One of the most straightforward ways to avoid probate is to create a revocable living trust during your lifetime. A revocable living trust is a separate legal entity that holds your money and property. You create this trust with the help of an estate planning attorney who can help you define its terms, name beneficiaries and successor trustees, and ensure it is properly funded. While you are alive, you can manage your trust and make use of its assets for your own benefit. When you become unable to handle your own affairs (either because you die or become legally incapacitated), management of the trust passes to a successor trustee whose job it is to follow the instructions in the trust document, and manage your trust assets for the benefit of your beneficiaries.

A revocable living trust avoids probate because the property transferred into the trust is no longer in your name when you die. Because the living trust is a separate entity, it survives past your death, retaining ownership of your assets and keeping the distribution of your property out of probate court. Moreover, a revocable living trust is surprisingly simple and cost-effective to set up and easy to manage while you are alive. It is also flexible in that it gives you the most control over what happens to your assets after you die. And, as its name suggests, you can change your mind and revoke or modify the trust while you are alive.

Name Beneficiaries for Bank Accounts and Investments

Not all your assets are part of your “probate estate.” Some accounts pass directly to named beneficiaries upon your death. Many financial accounts will allow you to designate beneficiaries you want to receive your assets after you die. You may have access to this method to avoid probate if you have:

• Insurance policies
• Pension plans
• Retirement accounts (i.e. 401k or 403b accounts)
• IRAs
• Investment accounts
• Certain bank accounts

However, to take advantage of this probate avoidance strategy, you must complete a beneficiary designation form for each account while you are still of sound mind to do so. (You should also re-file your beneficiary designations if you get divorced). If you don’t, the funds held in those accounts will become part of your probate estate.

Beneficiary designations aren’t available for all assets. That means they may not be enough on their own to minimize probate court involvement and get your family below the limit for settlement of small estates. Also, you must file a separate designation with each financial institution or advisor managing your assets. This makes it more difficult to change beneficiary designations, should your family expand or your wishes change.

Own Property Jointly with Intended Inheritors

Another strategy that many people use is to add their children or intended beneficiaries’ names to joint accounts or property deeds while they are still alive. If two or more people own property as “joint tenants with rights of survivorship,” then when one co-owner dies their interest in the property is divided among the remaining owners automatically, without the need for probate court involvement. This can be a highly effective estate planning strategy to avoid probate on the family home or your primary bank accounts.

However, joint tenancy comes with a big risk: creditors. Your would-be beneficiaries partially own your property as soon as it is transferred into their name. That means that if your children fall behind on their student loans or your spouse has a medical emergency, your assets may be garnished or foreclosed on to settle their debts. If you decide to use joint tenancy as an estate planning technique, be certain you understand your co-owners’ financial situations to avoid allowing creditors to claim your assets. Make sure to discuss your intentions with the beneficiaries to make sure it won’t cause problems for them.

Sign Survivorship Registrations for Key Property

To get the benefit of avoiding probate without the risk of creditor actions, you may also be able to use “transfer-on-death” strategies to protect some of your larger assets. For example, Connecticut law allows you to transfer motor vehicle registration automatically upon passing. Like named beneficiary designations, these forms allow your property to automatically transfer to the designated people upon your death, with no probate court involvement. Similarly, your house or other real property can be owned jointly with survivorship. This is typical for married couples and will also keep the house out of probate. If your spouse has already passed or the property is otherwise held only in your name, then a revocable living trust can also accomplish this.

The estate planning attorney at Lawrence & Jurkiewicz, LLC represents clients in Hartford and Litchfield Counties. Attorney Edward Jurkiewicz can help you plan for your future and choose the right estate planning strategies to avoid and minimize probate court involvement in your estate. Please call us at (860) 264-1551 or contact us at your convenience to schedule a confidential consultation.