How to Avoid Probate

In an earlier post, I discussed what people mean when they talk about probate. Many people view “probate” as a four-letter word. In fact, one of the most common questions I hear during an initial consult is how can my client avoid probate? I think that tThis is largely due to a misunderstanding of the probate process, but is also a result of aggressive marketing from insurance and trust companies trying looking to sell their trust preparation services. Things have changed over the years which have made probate easier, but there are still advantages and disadvantages to consider when deciding whether it is worth preparing an estate plan with the goal of avoiding probate.

Avoiding probate often requires a coordinated and comprehensive estate plan whichand may requirenecessitate the use of multiple tools. Ultimately, the goal is to make use of “non-probate transfers” or to make property a “non-probate asset.” Very simply, this means that the property transfers outside of, or without requiring, the probate process.

The best-known probate avoidance tool is a trust. There are many different types of trusts, each with their own purposes and goals. Property held “in trust” is a non-probate asset and the trustee is responsible for holding, managing and transferring the property according to the instructions provided in the trust document.

One of most common non-probate transfers is the use of “joint tenancy with right of survivorship” language in a deed. When spouses purchase a home together, they are often both listed on the deed as joint tenants. Upon a “joint owner’s” passing, property that is “jointly owned” transfers automatically to the survivor. As a result, it is often unnecessary to conduct a probate when a spouse passes away. However, just because it is common for spouses to jointly own a home, doesn’t mean that is always the case. Where one spouse already owned the house before marriage, they may forget to add the new spouse to the title. The seller, or closing company, may also err by failing to include the “joint tenant” language. Without this specific language, the property will not transfer automatically and a probate will be required.

Other ways to transfer land or other types of real property include Transfer on Death Deeds and lifetime gifting with reserved life estates. These are very different forms of transfers which should be carefully discussed with your estate planning attorney.

Financial assets, including bank and investment accounts, may similarly be transferred by making use of payable on death beneficiary designations. It is also common to see jointly-owned accounts. These are contractual matters and must be setup with your bank or financial services provider.

Gifts made during one’s lifetime (also known as inter vivos gifts) is another common way to a make a non-probate transfer. Gifting will likely become its own post, at a later date. While most people will never need to be concerned about incurring a gift tax, it is worth noting that there is an annual “gift tax exclusion” such that total gifts below that amount do not need to be reported and do not reduce the transferor’s unified tax credit. This amount is periodically adjusted for inflation. In 2025, the annual gift tax exclusion is $19,000.00.

Finally, if you have less than $50,000 (in North Dakota) or $75,000 (in Minnesota) of probate assets, which do not include non-probate assets or transfers that are discussed above, you can take advantage of special procedures for “small estates” that may require nothing more than a simple affidavit.

A comprehensive estate plan will need to take all of these transfers into consideration. Each has its own advantages and disadvantages. Some of these may have serious unintended consequences. Another thing that you should keep in mind is that many of these transfers can be unintentionally made without the assistance of your estate planning attorney. This could cause you to accidentally interfere with your otherwise carefully crafted estate plan.

Because of this, you should consider discussing with your attorney before making major financial decisions. You should also periodically review your estate plan to make sure that everything is still properly coordinated. If you have any questions, please contact us today.