Probate Explained: What It Is and How to Avoid It

You’ve built a retirement plan to last the rest of your life. But what about after?

Without a plan for how your assets transfer to your loved ones, they may be forced to deal with court delays, legal fees, and emotional stress—at the worst possible time.

That’s where probate comes in. It’s a process many people don’t understand until they’re caught in the middle of it.

As part of Make-a-Will Month, we’re breaking down what probate is, why people try to avoid it, and the smart moves you can make now—using wills, trusts, annuities, and life insurance—to protect your family and preserve your legacy.

What Is Probate?

Probate is the court-supervised legal process of settling a deceased person’s estate. It includes:

• Validating the will (if there is one)
• Appointing an executor or administrator
• Paying off debts and taxes
• Distributing assets to heirs

If no will exists, the estate is considered intestate, and state law determines who inherits everything.

Even if you have a will, your estate still goes through probate unless your assets are structured to bypass it.

Why Probate Can Be a Problem

Probate is often time-consuming, public, and expensive. Here’s why many families try to avoid it:

• Delays: Probate can take months or even years, depending on your estate size and complexity.
• Costs: Legal fees, court costs, and executor commissions can consume 3–7% or more of your estate.
• Lack of Privacy: Probate is a public process—your assets, debts, and family details become part of the public record.
• Emotional Strain: Grieving families may face paperwork, court visits, and legal confusion.

What Goes Through Probate?

Assets that are solely in your name with no beneficiary designation or joint owner will pass through probate. Examples include:

• Real estate
• Bank accounts (without POD designation)
• Investment accounts (without TOD designation)
• Vehicles
• Business interests
• Personal property like jewelry, collectibles, or furniture

What Bypasses Probate?

Several tools allow you to pass assets directly to your loved ones—no court required. These include:

1. Beneficiary Designations

Used for:

• Life insurance
• Annuities
• Retirement accounts (IRAs, 401(k)s, etc.)

Tip: Be sure to name both primary and contingent beneficiaries. These designations override your will.

2. Transfer-on-Death (TOD) / Payable-on-Death (POD)

• TOD is used for brokerage and investment accounts.
• POD is used for bank accounts like checking, savings, or CDs.

Tip: These designations allow for fast transfer without probate.

3. Joint Ownership with Rights of Survivorship

Property or accounts jointly titled with rights of survivorship pass automatically to the surviving owner.

Be cautious— improper joint ownership can cause tax or inheritance issues.

4. Revocable Living Trust

One of the most comprehensive tools for probate avoidance. A living trust:

• Holds your assets while you’re alive
• Lets you manage them as trustee
• Distributes them privately after death—no probate required

Financial Products That Avoid Probate with Beneficiary Designations

Certain products are built to bypass probate—as long as beneficiary forms are completed and kept up to date.

Here are the most common:

Life Insurance

• Death benefit goes directly to the named beneficiary, tax-free and probate-free.
• No beneficiary? The benefit may go into your estate and face probate.

Annuities

• Annuities with beneficiaries pass outside of probate.
• If no beneficiary is named or updated, proceeds may revert to the estate and face court delays.

IRAs and Qualified Retirement Plans (401(k), 403(b))

• These pass to the named beneficiary—not controlled by your will.
• Outdated or missing beneficiary info can create tax and legal problems.

Transfer-on-Death (TOD) Investment Accounts

• Stocks, mutual funds, and brokerage accounts with a TOD designation avoid probate.
• Easy to add through your financial institution.

Payable-on-Death (POD) Bank Accounts

• Checking, savings, and money market accounts can be linked to a POD recipient for probate-free transfer.

Health Savings Accounts (HSAs) and Some Non-Qualified Accounts

• Certain institutions allow beneficiary designations on HSAs and other accounts.
• If not designated, they may default to your estate.

Important Reminder: Beneficiary designations take legal precedence over your will. Always keep them current and aligned with your overall plan.

Example: Two Different Experiences

John Only Had a Will

John passed away with a will but no beneficiary designations. His estate went to probate, taking over a year to resolve and costing thousands in legal fees. His children struggled with access and delays.

Susan Had a Trust and Updated Beneficiaries

Susan had a revocable trust, POD accounts, and up-to-date life insurance and annuity beneficiaries. Her assets transferred quickly, privately, and with no court involvement. Her family avoided stress and expenses.

How to Avoid Probate with Confidence

Take these smart steps today:

1. Create or review your will

• Clarify asset distribution
• Name a trusted executor
• Add a guardian for dependents

2. Add or update beneficiary designations

• For all life insurance, annuities, and retirement accounts

3. Use TOD/POD accounts where available

• Ask your bank or investment provider

4. Consider a living trust

• Especially useful for privacy, speed, and asset protection

5. Coordinate your asset titling

• Ensure your will, trust, and account titles work together

6. Review your plan regularly

• After major life events: marriage, divorce, births, or deaths

Ask Yourself: If something happened tomorrow, would my family receive what I intended—without court delays or added stress?

If the answer isn’t a confident yes, now is the time to act.

Legacy Planning Isn’t Just Legal—It’s Personal

Avoiding probate isn’t about skipping steps—it’s about removing roadblocks for the people you love.

By taking action today, you give your family peace of mind, protection, and clarity when it matters most.

Make-a-Will Month is the perfect time to review your plan.

Coming Up Next:

In our next article, we’ll explore TOD, POD, and other estate tools you should know—and how they can work alongside your will and trust to make your legacy seamless and secure.

Written by Brent Meyer, founder of SafeMoney.com. With more than 20 years of hands-on experience in annuities and retirement planning, Brent is committed to helping Americans make informed, confident financial decisions.

Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. Please consult a licensed estate planning attorney or financial professional to discuss your specific situation.

The post Probate Explained: What It Is and How to Avoid It first appeared on SafeMoney.com.