The "Estate Planner's Arsenal" series highlights specific estate planning tools and their uses.

Clients often state that their main estate planning goal is to avoid probate.  This article does not comment on whether probate avoidance is a good thing, as that depends on everyone's unique personal circumstances.  Instead, this article briefly describes some common estate planning tools for avoiding probate.  Each has their own advantages and disadvantages, which should be explored in detail before implementation.

Joint Tenancy.  Items such as real estate and automobiles are often owned by people in "joint tenancy with right of survivorship."  This means that upon the death of one of the owners, full title automatically transfers to the surviving owner, without the need for probate.  The survivor simply needs to file the death certificate with the Recorder's Office or DMV, and fill out relatively simple paperwork.   

Payable on Death (P.O.D.).  Commonly seen with bank accounts, P.O.D. accounts list a beneficiary to receive the funds upon the death of the account owner.  Like joint tenancy, relatively simple paperwork is all that's needed to transfer the funds at the account owner's death.

Transfer on Death Deed (T.O.D.D.).  Transfer on Death Deeds are relatively new in Minnesota.  They act like a P.O.D. account, except that T.O.D.D.'s apply specifically to real estate.  Since real estate is often the only probate property in an estate, a T.O.D.D. can be an effective way to avoid probate. 

Revocable Living Trust.  One of the many uses of a revocable living trust is that any property in a revocable living trust bypasses the probate process.  This can be especially useful when you have real estate in a different state.  By placing out-of-state real estate into your Minnesota trust, you can avoid probate in that other state.

Beneficiary Designations.  A large part of many estates are the decedent's retirement accounts and life insurance policies - i.e. property with beneficiary designations attached which direct the disposition of the property at your death.  If you die before naming a beneficiary for this property, then the property must pass to your estate and through the probate process before ultimately reaching your heirs. 

Again, this is not a complete list of probate avoidance tools, but a list of commonly used methods.  Please note that the descriptions are very general and may not work for every person's estate planning goals.  If probate avoidance is your goal, seek the advice of an estate planning attorney to determine the most appropriate method for your situation.