At your death, your estate will have to go through probate, the process in which a local court supervises the distribution of your assets. In some states this process can be expensive and time-consuming.
One way to minimize exposure to probate is to set up a trust and re-title assets to the trust. At your death, assets held in trust won’t be subject to probate. You can specify how the trust assets will be divided.
If probate avoidance is your goal, a revocable trust is the usual choice. In most states, you can be the trustee and beneficiary of your revocable trust, so you can keep control of assets moved into the trust.
You can name a successor trustee for your revocable trust. If you become unable to handle your own affairs, this successor can take over management of the trust assets and provide for your care. Remember that assets much be transferred into the trust in order for them to be protected in case of your incapacity and avoid probate, so you must go through with the paperwork.
You don’t have to put assets into a trust to avoid probate. Other techniques:
Joint ownership. If assets are titled as “joint ownership with right of survivorship,” and one co-owner dies, the survivors automatically inherit the property, without going through probate.
Retirement accounts. Contribute as much as possible to IRAs and employer-sponsored plans. At your death, the account will go to the beneficiary or beneficiaries you’ve named.
Accounts with beneficiaries. Most states offer payable-on-death (POD) and transfer-on-death (TOD) procedures for bank and brokerage accounts. Either way, you name a beneficiary or beneficiaries to inherit the account after your death. Life insurance policies and annuities also pass to beneficiaries you have named, with no need for probate.
Gifts. Perhaps the simplest way to arrange for assets to avoid probate is to give them away while you’re still alive. Just be sure you don’t give away assets you think you might need some day.