The pathway to avoiding probate, here’s What You Need to Know…

Probate is the legal process of validating a deceased person’s will and granting the executor authority to manage the estate. In Victoria, probate can sometimes be time-consuming and expensive, prompting many people to explore ways to avoid it through careful estate planning. Below, we outline key options, including joint ownership, trusts, and beneficiary nominations, along with their advantages and potential drawbacks.

Joint Ownership

Owning property or financial accounts jointly is one way to bypass probate. When assets are held jointly with a “right of survivorship,” the surviving owner automatically inherits the deceased’s share, eliminating the need for probate.

Advantages:
Joint ownership simplifies the process of transferring assets, providing the surviving owner with immediate access. For instance, if a family home is jointly owned by spouses, the surviving spouse can retain control of the property without requiring probate.

Drawbacks:
This strategy may not be appropriate for everyone. Joint ownership with individuals outside the immediate family can lead to tax complications or disputes, especially if one owner faces financial or legal issues. Additionally, if both owners pass away simultaneously or within a short period, probate may still apply.

Trusts

A trust involves transferring ownership of assets to a trustee, who manages them for the benefit of nominated beneficiaries. Assets held in a trust do not form part of the deceased person’s estate and are therefore excluded from the probate process.

Advantages:
Trusts provide flexibility and control over how and when assets are distributed, making them particularly useful for families with young children or those with specific legacy goals. Trusts also maintain privacy, as they avoid the public nature of probate.

Drawbacks:
Setting up and maintaining a trust can be more complex and costly than other options. Trustees are required to manage the trust, and disputes may arise between them and beneficiaries. Additionally, some trusts are irrevocable, meaning assets transferred into the trust cannot easily be retrieved.

Beneficiary Nominations

Certain financial accounts, such as superannuation funds and life insurance policies, allow account holders to nominate a beneficiary. These nominations enable funds to be paid directly to the chosen beneficiary, bypassing probate entirely.

Advantages:
Nominating beneficiaries is straightforward and cost-effective. It ensures that funds are distributed quickly, which can provide vital financial support for dependants.

Drawbacks:
Superannuation funds and other accounts often have restrictions on who can be nominated as a beneficiary. If no valid beneficiary is nominated, or if the nominee is no longer able to receive the funds, the asset may still require probate. It’s important to review and update beneficiary nominations regularly to ensure they reflect your current wishes.

Although probate is a necessary legal process in many cases, there are strategies to reduce or avoid its impact. Joint ownership, trusts, and beneficiary nominations each offer practical solutions for streamlining estate administration. However, every approach has its own set of considerations, so seeking professional advice is essential.

Working with an experienced estate planning lawyer can help you develop a tailored plan that minimises delays, ensures your assets are distributed according to your wishes, and protects your loved ones from unnecessary complications. With careful planning, you can reduce the need for probate and provide clarity and certainty for your family.

Please note, this article is general in nature and does not take into account your personal situation or circumstances. For further information please contact Kenney Legal at info@kenneylegal.com.au or contact us via our social media networks.