A Probate Primer

Consider taking steps to avoid your estate from going into probate

By Deborah Jeanne Sergeant

In financial planning circles, “probate” sounds like a dirty word.

Avoiding probate “is very important, as otherwise, it’s published as to what your assets are,” said Cynthia Scott, who has comprehensive financial planning certification, and is founder and president of OMC Financial Services, Ltd. in DeWitt. “To prevent this, you have to take measures, so people don’t have access to that information.”

If your privacy is important, avoiding probate can help keep your financial information private.

In addition, Scott counts a timely distribution of assets as another important reason for avoiding probate. Otherwise, the funds remain out of reach to beneficiaries as they go through the court system — a process that can take seven months. One way to avoid this is to use the right designation on accounts.

“What you need to do is if you have a single account with a broker or bank, put on it a ‘payable at death’ beneficiary,” Scott said. “If you make it a joint account, if something happens to them, it becomes part of their estate and is available to creditors. We do that all the time with single accounts. It goes directly to your heir, so everything is done seamlessly.”

She added that the other way to avoid probate is to use a revocable or irrevocable trust. Each of these instruments names a beneficiary. Any donations to charity also avoid probate.

“If you have an IRA and you put down a charity and a beneficiary, the beneficiary won’t have to have the money go to probate,” Scott said.

Unfortunately, many people erroneously believe that simply making out a will that states their wishes eliminates the possibility that their assets will go through the probate process upon their death.

“Assets that are left to an estate are subject to probate,” said Randy L. Zeigler, certified financial planner and private wealth adviser for Ameriprise Financial Services, LLC in Oswego. “A will stipulates to the state of New York the wishes of the person, but the process of completing those assets through the direction of the will is the probate process.”

He advises people to use beneficiaries on their accounts if they wish to avoid the probate process. Trusts and ownership structures can also help avoid assets going through probate.

“Sometimes vehicles or collectibles are difficult because they don’t have titles,” Zeigler said.

Selling or giving an item to an heir before death can help ensure they don’t go through the probate process because the ownership of the item has already transferred.

But Zeigler said that real estate typically goes through the process when the widow or widower dies. For example, if a property is jointly owned and both owners die, the property will go through the probate process unless it has already been transferred to an heir before the death of the second spouse.

Although probate is generally viewed as negative, Zeigler said that it does help ensure fairness in the process of passing along assets after death. It can also help the estate pay any outstanding bills and “ensure the deceased person’s wishes are honored.”