Ways to avoid probate

Prompted by consumer outrage over the delays and high costs imposed by probate, courts, legislatures, and state governments have devised a number of ways for property to change hands after death without having to go through probate. If your family member doesn't have one or more of these methods in place, explain why she might want to consider them.

• Payable-on-death accounts: Also called Totten trusts, tentative trusts, and revocable bank account trusts, payable-on-death accounts allow those who own financial accounts to name specific beneficiaries to automatically take the remaining amount when they die. Banks, savings and loans, and credit unions all offer these accounts or can add named beneficiaries to an existing account at no extra charge.

• Named beneficiaries on retirement accounts: An entire generation of retirement accounts -- such as IRAs, Keoghs, 401(k)s, and 403(b)s -- came into being while your relative was likely still in the workforce. Such accounts can specify a beneficiary and a backup to receive any remaining funds at death without requiring a court proceeding.

• Transfer-on-death registrations: A law called the Uniform Transfer-on-Death Securities Registration Act allows people to register an individual to take their stocks, bonds, and brokerage accounts at death, without probate, similar to a pay-on-death account. This simplifying law has been adopted in every state except Louisiana and Texas.

In a few states -- including California, Connecticut, Kansas, Missouri, and Ohio -- a car owner can also register a vehicle so that a named beneficiary automatically takes title to it at death.

And laws in Arizona, Arkansas, Colorado, Kansas, Missouri, Nevada, New Mexico, and Ohio also allow real estate to be transferred through transfer-on-death deeds.

• Joint ownership: In most states, property will avoid probate if title to it is held jointly. When one property owner dies, the surviving joint owner or owners indicated on the ownership documents automatically get the deceased owner's share -- again, without involving the probate courts. Houses, large bank accounts, and other property of value are good candidates for joint ownership that avoids probate. However, the property will pass through probate when the last surviving owner dies unless he or she has taken steps to transfer it though some other probate-avoiding method.

Depending on the state and type of property involved, joint ownership is called "joint tenancy with right of survivorship," "tenancy by the entirety," or "community property with right of survivorship."

• Living trusts: Living trusts, also called revocable living trusts, were created for the express purpose of avoiding probate. The concept is simple: During life, property owners complete a declaration that transfers property such as real estate, stocks, and bank accounts to a trustee.

The trustee is often the same person who created the living trust -- and he or she remains free to use, spend, or sell it while alive. At death, the property in the living trust passes automatically to the person or people named as "successor trustees." A living trust operates much like a will, except that the property owner must go through the legalities of transferring ownership of property to the trust. The other important difference: Probate is not required when ownership of the trust property shifts to the successor trustee.

• Simplified procedures for small estates: Many state laws provide that a small amount of personal property can be transferred free of probate, or processed through a greatly simplified procedure. The definition of "small" varies widely among the states, from a low of $3,000 to a high of $150,000. Also, in some states, certain kinds of valuable property -- such as cars and real estate -- are excluded from the total.

You might have to do some sleuthing to find out the legal rules for your relative's state. Begin an Internet search by entering the name of his state and the terms court and probate in the browser. Be sure to go to the official court site, not one operated by someone trying to sell probate-avoidance services.