People treat the probate process as if it is as inevitable as, well, death and taxes.
People with substantial assets fear probate because it is a public process, and it exposes the estate to taxation. The objective is to keep as much as possible “in the family,” and not turn it over to Uncle Sam.
Actually, there are a handful of practical, easy ways to prevent assets from going through the probate wringer. One of the most popular is not to have sole ownership of those assets. I.e., co-own real properties and other assets with another person or persons.
How does co-ownership work?
The basic problem is that you own property, and probate wants to go over all your assets with a fine comb, and pocket what they can. But there are limits to this going-over. Assets must be owned solely by the decedent. Cars, for instance, are registered to one name only, so they must pass through probate.
The most common assets people worry about are real properties. These are some common co-owned assets: homes, cabins, empty land. But it could just as well be a ball club, a business, a work of art or diamond necklace.
Friends and family
People co-own with friends and family members. Co-owning a home with a family member is a good way to ensure that it becomes theirs when you die.
Co-ownership can get technical. While you may enjoy keeping an investment out of probate, you will have to deal with shared responsibilities – who pays for what.
In our next installment of this series about avoiding probate, we will talk about the types of co-ownership, and which one makes the most sense for you.