Many people aren't sure what probate is, only that it involves lawyers and courts, is very expensive and takes a long time. Bingo!

What is probate?

Proper definition: Probate is the name given to the legal process by which the court oversees the distribution of property left by a will.

Realistic definition: Probate is the very long process by which lawyers, officials and executors rip-off a dead person's estate by charging horrendous fees for doing little more than filling out routine paperwork required by state law.

What happens in probate?

• The deceased person's will must be filed with the court.

• The deceased person's property must be identified, even if it is all properly listed and bequeathed in his/her will.

• The property must be appraised.

• The deceased's taxes and debts are paid off out of proceeds and assets of the estate.

• The will must be proven to be valid to the court.

• Anything that is left is distributed to heirs as the will directs.

How to avoid probate

Because leaving proprty in a will usually results in probate, probate avoidance involves arranging before your death to transfer property to your heirs by other legal means.

Revocable living trusts. Living trusts are basically quite simple. You create a legal entity called a "trust" and transfer something of value out of your name and into its name. A living trust is a legal entity that can buy, sell and own property. You keep control over it while you're alive because you name yourself as the "trustee" (or you can be a co-trustee with your spouse or another person). At your death someone else becomes the trustee and transfers the property to the person you've named to inherit it. Property held in a living trust does not need to be probated.

Most people who plan their estates eventually turn to a living trust. But not everyone needs one. If you own little property and are young and healthy, for example, you probably don't need to spend the money to create a trust yet.

Joint tenancy. Generally, this is one way co-owners, called "joint tenants" can own property together. Under some circumstances it is a useful probate-avoidance tool because all property held in joint tenancy carries the "right of survivorship." This means that when one joint tenant dies, his or her ownership share of the joint tenancy property is automatically transferred to and becomes owned by the surviving joint tenants, without the need for probate.

Real estate, bank accounts and safe deposit boxes can be held in joint tenancy.

Pay-on-death. This is a way to formally name another person to receive certain property, or what is left of it, when you die. Property left with a pay-on-death (P.O.D.) designation avoids probate. Most states allow this for stocks and bonds, brokerage accounts, retirement accounts and profit-sharing plans. P.O.D. accounts avoid probate with very little paperwork. Your bank or the U.S. Treasury Department can provide you with a simple form on which you designate the beneficiary.

Life insurance. The proceeds of a life insurance policy avoid probate, which is one reason many experts suggest life insurance to be a possible estate planning tool.

Retirement accounts. Money in an individual retirement plan such as an IRA, Roth IRA or 401(k) account that is left to a named beneficiary upon the owner's death does not go through probate. The plan administrator pays the funds directly to the named beneficiary.