Methods to avoid probate
First issue, to be clear: If there is not a Will, the estate will go through probate (court) and the judge will determine where assets go, based on state statutes. If there is a Will, the estate will go through probate (court) and the judge will determine where assets go, based on the instructions of the will. Having a will does not avoid probate.
There are numerous tools that people can use to avoid probate. The most common, and the best method of ensuring a comprehensive estate plan is to have a revocable living trust. A revocable living trust, if it is properly executed and all of the decedents assets were placed into the trust prior to death will avoid probate. In addition to avoiding probate, it also addresses other issues prior to death, such as instructions for incapacity.
There is another method that can be used for minimizing and possibly avoiding probate. This alternative method is by listing beneficiaries on each specific asset.
To utilize this self-help method, the complexity depends on what assets you have:
Financial Accounts: Contact your bank, investment company, 401(k), and the custodian of your individual retirement account (IRA) and have them add the beneficiaries to each account. Upon death, those accounts would then transfer to the appropriate heirs directly and successfully avoiding probate for those specific assets.
Real Estate: In some states, you are able to list beneficiaries on the deed to automatically transfer real estate upon death, avoiding probate. Other states you are unable to. To add complexity, California, has enacted legislation effective January 1, 2016 to provide the ability to transfer real estate by a beneficiary deed, however the legislation is set to expire in five (5) years. This adds a difficulty of not knowing what will happen after five years.
Personal Property: If any personal property is owned at the time of death, it is transferred through probate. Depending on the value of the property and your specific state, there may be an option for a small-estate probate.