Many Pennsylvania residents want to avoid probate with their estate plans. By doing so, they allow loved ones to receive their inheritances without a long, potentially expensive court supervision process.
These are some of the key estate planning strategies to bypass probate in the Keystone State.
Establish a living trust
Assets held in a living trust are exempt from Pennsylvania probate. To use this strategy, form a living trust and transfer the property in question to its ownership. You can hold cash, investments, real estate, vehicles and countless other assets in this type of trust. The trust document details the beneficiaries for these items and names a successor trustee to distribute the assets when you die.
Name payable-on-death beneficiaries
Most bank and investment accounts allow you to designate a beneficiary who will receive the funds if you die. Naming payable-on-death inheritors for these accounts allows them to pass to these recipients outside of the Pennsylvania probate process. You can also file transfer on death certificates for some types of property, including motor vehicles.
Make gifts during life
Gifting funds or property to your intended beneficiaries during your lifetime will prevent the need for probate for these items. The IRS allows you to give a tax-free gift of up to $15,000 per person in 2021, up to a current lifetime maximum of $11.7 million.
These strategies can potentially reduce the size of your probate-eligible estate below the $50,000 threshold or even remove all your assets from the probate requirement. Pennsylvania allows smaller estates to undergo a simplified form of probate.