Every time my mother talks about her will, she expresses dread over probate. Horror stories about how states have held estates in probate for years are rife, and they saddle many life and death decisions with unnecessary worry. But, you can bypass probate and your estate - or portions of your estate - can go directly to your beneficiaries without court hassles. You may save some time and money in the process.

Probate is the legal process of proving a will, the appointment of an Executor or Executrix, and the final settlement of an estate. By custom, probate has come to mean the legal process by which a deceased person's estate is administered and distributed. Probate laws vary from state to state, and they continue to change as states revise their laws to fit mid-size and smaller estates.

You cannot avoid probate if you die without a will (also known as dying "intestate"). If you die intestate, the probate court will appoint a person to receive all claims against the estate, pay creditors, and then distribute all remaining property in accordance with the laws in your domicile state.

So, the advantage to having a will is the ability to name your Executor or Executrix, a person who fills the same role of the state's administrator. In addition, you have more control over where your estate is distributed. Finally, creditors who fail to file claims against your estate within a specific amount of time (usually about six months) are out of luck. Decisions are legally binding and final once that will has been probated.

With that said, probate does take time. The process averages about six to nine months to complete, but it can take years to finalize complex estates. This process may tie up funds that your family might need immediately, and the cost for a large estate can eat up as much as five percent or more of your estate's value.

So, if you want to avoid probate altogether or place portions of your estate out of the court's reach, you can try one or more of the following tactics. I've listed some basic ideas this week, with more complex ideas to follow in an upcoming article:

Bank Accounts: You can sign a form provided by the bank that names your beneficiary on a checking or savings account. Your bank account then becomes a P.O.D. (Payable On Death) account. This account acts just like a normal account, where you maintain control and where the beneficiary cannot touch the money. When you die, your beneficiary goes to the bank with proof of your death and proof of his or her identity and collects the money.

While you may want to create a will to handle other monetary and property issues, you can still maintain a bank account that fits the P.O.D. requirement. This account, for instance, could pay for your funeral if you haven't preplanned that event. The P.O.D. allows your funds to be accessible immediately after a death certificate has been issued.

If you maintain a joint account with a spouse, your spouse probably won't have a problem with access to that account after your death. But, have a sit-down with a bank representative for reassurance on whether this account can avoid probate in your domicile state. The P.O.D. account should only become active for the beneficiary once both spouses have died.

Portfolio Designations: Assets can avoid probate court if you establish payable-upon-death provisions for savings accounts (as mentioned above) and CDs. You can also ask your financial advisor or transfer agent to set up a TOD provision for brokerage accounts that contain stocks, bonds, and/or mutual funds, but only if your domicile state has adopted the Uniform Transfer-on-Death (TOD) Securities Registration Act (that link will lead to more information about states that have adopted this Act as well as the Act's full text). The beneficiary usually must take steps to re-register the securities and other investments in his or her name upon your death.

You can easily change your stock ownership to reflect a beneficiary on a form that's available from the stock brokerage or the company. Long-term investors might find this venue an efficient and easy way to deal with portfolio distribution, as beneficiaries cannot touch these assets while the owner remains alive.

TOD for Life Insurance and Automobiles: Life insurance death payouts can bypass probate if you name a beneficiary other than your estate. In some states (such as Ohio), you can transfer your automobile to a beneficiary other than your estate as well. As with all other beneficiary designations mentioned thus far, the beneficiary has no right to your property until your death. Additionally, you can change that beneficiary or sell or give the car away while you're alive. But, remember that the beneficiary also acquires payments, liens, or any other attachments to that vehicle. The automobile may need to undergo appraisal before assignment in some states (such as California).

Joint Ownership: Whether you're legally married or not, when you share title to property you can avoid probate when one person in that ownership dies. The survivor still retains ownership of any bank accounts, securities, real estate, or other valuable property.

Still, you might want to check state laws when you create or maintain a joint ownership, as some states may require extra paperwork for specific properties. Another huge drawback to this tactic is that when you sign a joint ownership agreement, you have given up all rights on half that property. That other owner is free to sell, give away, or lose his or her portion to creditors. And, once you die, the surviving owner may feel entitled (and in some states rightly so) to the full remaining property. While that may be your wish, other survivors might not agree.

To help joint ownerships flow smoothly after your death or during incapacitation after an illness or accident, you might want to assign a Financial Power of Attorney to handle your will or other financial matters. Or simply designate beneficiaries instead. You might rest easier forever.

More Next Week,
Linda Goin