Property that you own individually and is titled solely in your name is your probate estate. This could include real estate, stocks, automobiles, personal effects, as well as property that you own as "tenants in common" with other people.
Q: WHAT TYPES OF PROPERTY BYPASS PROBATE?
Not all of your property will pass through probate. Property can bypass probate by passing automatically to someone by contract or operation of law. The following are examples of types of property that bypass probate: - Property owned in "joint tenancy with right of survivorship" or "tenancy by the entirety." This type of property will pass directly to the named survivor. For a married couple, this could be a home or bank account titled jointly with right of survivorship. - Life insurance proceeds with a named beneficiary other than the estate (usually a person or trust.) - Qualified retirement proceeds (IRA, 401-K pension, profit sharing) where there is a named beneficiary other than the estate. - Property held by a trust established during your lifetime (i.e., "living" or "inter vivos" trust).
Q: IS JOINT TENANCY WITH MY CHILDREN A GOOD WAY TO AVOID PROBATE AND REDUCE TAXES?
People should be cautious when they try to avoid probate or reduce taxes with their children as joint tenants for three reasons: - First, the child's share of the property becomes subject to the child's creditors, including people who win lawsuits and legal judgments against them. - Second, the child would lose half of the potential "stepped up" valuation to market value of any appreciated asset inherited, which eventually results in more income taxes being paid. - Third, the joint property passes automatically to the surviving child which may result in property distributions contrary to your wishes if other beneficiaries are involved.