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Probate doesn't have to apply to all of your assets

If you've ever lived through the death of a close family member -- and you were one of the beneficiaries of his or her estate -- you know how nerve-wracking, time-consuming and costly the probate process can be. This is why so many Pennsylvania residents want to do everything they can to prevent the loved ones they leave behind from experiencing the same thing.

In fact, there are numerous estate planning techniques you can employ to bypass the need for certain assets to go through probate. Let's take a look at the three most common probate-avoidance strategies:

Jointly owned assets

You've heard of a joint bank account, right? How about a jointly owned house or a jointly owned car? There are many personal assets that you can sign off to a joint owner. The legal term for this is "joint tenancy with the right of survivorship." When you've entered into a joint tenancy with another person, and you die, then the other owner will assume full ownership without needing to probate those assets.

Death beneficiaries

Another way to skip probate for certain high-dollar assets involves the use of death beneficiaries on insurance and investment accounts. Every IRA or 401(k), for example, has a death beneficiary form that the owner must fill out. Usually, the named beneficiary can receive the assets inside these accounts upon the death of the owner, simply by presenting appropriate identification and the death certificate to the financial institution in charge of the assets. In many cases, they can claim ownership of the assets without probate.

Payable on Death Accounts (PODs) are also relatively simple to set up for specific bank savings accounts, allowing the transfer of funds held in the accounts directly to the named beneficiary.

Just give it away

Of course, for Pennsylvania estate planners who have more money and assets than they need before they die, simply giving the assets away before death is perhaps the easiest way to avoid probate. However, gift taxes could apply to some assets if they are particularly valuable or involve a large amount of cash, so estate planners should familiarize themselves with gift tax thresholds and annual gifting limitations before utilizing this strategy.

Learn which probate avoidance strategies apply to your situation

Probate avoidance is one of the most important aspects of a well-planned estate. Make sure you review all the strategies that could help your heirs bypass probate and select the most appropriate ones to suit your needs and financial situation.

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