Probate Avoidance: How to Avoid Probate
Probate is a court-supervised process for identifying and gathering the assets of a deceased person, paying the decedent’s debts, and distributing the decedent’s assets to his or her beneficiaries. Unfortunately, the probate process can be costly and time-consuming.
To avoid probate, it is essential to plan ahead and structure your assets and estate so that they pass to your heirs without going through the probate court. By avoiding probate, you can save on attorney’s fees, avoid court hearings, and minimize delays, ensuring that more of your hard-earned money goes to your heirs. Here are some effective methods to avoid probate:
1. REAL ESTATE: You can avoid probate on real estate by recording a deed in the public records that titles the owners as:
a. Husband and wife, also known as “tenancy by the entireties.” In this case, when one spouse dies, the property automatically passes to the surviving spouse without going through probate.
b. Joint tenants with rights of survivorship. This arrangement allows property to transfer automatically to the surviving owner upon death, similar to husband and wife, but the owners need not be married. The deed must state “joint tenants with rights of survivorship,” and each owner must have an equal share of ownership.
c. Revocable living trust. A trust is designed to hold assets to avoid probate. You create a trust document that allows you to manage the trust during your lifetime while deciding who will receive the assets upon your passing. You can include your homestead in a trust without losing homestead benefits while you are alive.
d. Lady Bird Deed, also known as an enhanced life estate deed. This is a simple and cost-effective way to avoid probate, as it allows you to maintain control over your property during your lifetime while automatically transferring it to your beneficiaries upon your death, bypassing probate completely.
2. AUTOMOBILES, RVs, BOATS, AND OTHER VEHICLES: In Florida, there is no “transfer on death” title for vehicles. You can add another person to the title at the DMV, using “OR” between names, to create survivorship between the owners. This allows either owner to sell the vehicle without the other’s signature, regardless of whether the other owner is alive or deceased. Alternatively, you can title the vehicles in a trust, which also requires a visit to the DMV.
3. BANK ACCOUNTS: If two or more people’s names are on a bank account, either person can withdraw the entire balance without needing the other’s signature, regardless of their status. To avoid probate for the last account holder to die, fill out a “beneficiary” form (also known as “payable on death [POD]” or “transfer on death [TOD]”) with the bank, naming your children as beneficiaries. You retain full control over the funds during your lifetime, and upon your death, the beneficiary can claim the money directly from the bank without probate court proceedings. You can also add contingent beneficiaries if the primary beneficiaries predecease you.
4. IRA’s, 401(k)s, INSURANCE POLICIES, PUBLIC OR PRIVATE PENSIONS, STOCK BROKERAGE ACCOUNTS, CDs, AND NEARLY ANY OTHER FINANCIAL ACCOUNT: Just like bank accounts, you can fill out a “beneficiary” form for these accounts. This process is simple, inexpensive, and effective. If your financial institution does not offer such forms, consider moving your assets to one that does.
5. GIFTS: Giving away assets during your lifetime can help reduce the size of your estate, which is excellent for valuable items like jewelry and antiques. In 2025, you can give up to $19,000 to as many individuals as you wish without requiring a gift tax return (an increase from $18,000 in 2024). It's wise to consult your accountant regarding potential gift tax implications.
6. ESTATE TAXES: Florida does not impose estate taxes at the state level. At the federal level, estates under $13.99 million are not taxed for individuals dying in 2025. However, this threshold will decrease to $7.5 million per individual in 2026 unless Congress extends provisions from the 2017 Tax Cuts and Jobs Act.
Thus, assets that must go through probate include:
- Real estate with only one owner, not held in a trust or under a Lady Bird Deed.
- Financial accounts with no named beneficiaries.
- Retirement accounts without designated beneficiaries.
- Other assets not held in a trust or another probate avoidance method.