Although the ability to dictate what happens to estate assets remains the number one reason why most people create an estate plan, additional goals and objectives are also typically included as that initial plan is revised and updated over the years. A popular goal added to the average plan at some point is probate avoidance. Probate in New Hampshire can be time-consuming, costly, and public, prompting many individuals to explore strategies for probate avoidance to protect their estate and legacy. With that in mind, the attorneys at Legacy Care Law Firm discuss protecting your estate and legacy in New Hampshire using strategies aimed at probate avoidance.
Understanding Probate in New Hampshire
In New Hampshire, probate is governed by the New Hampshire Circuit Court, Probate Division, which oversees the distribution of a deceased person’s assets and the settlement of their estate. Like in many other states, the probate process in New Hampshire involves validating the decedent’s Last Will and Testament, if one exists, paying off debts and taxes, and distributing the remaining assets to the named beneficiaries and/or legal heirs of the estate.
Most states, including New Hampshire, offer some type of small estate probate that allows an estate to forego formal probate. New Hampshire does not have a small estate affidavit; however, the state does offer a “waiver of administration” for small estates that qualify. Nonetheless, probate in New Hampshire can still be complex and time-consuming, making probate avoidance strategies particularly appealing to residents seeking to minimize costs and delays.
Strategies for Probate Avoidance in New Hampshire
Probate avoidance is a critical aspect of estate planning for New Hampshire residents seeking to protect their assets and legacy. To streamline the transfer of your estate assets to beneficiaries while minimizing costs and delays associated with probate, your estate planning attorney may suggest incorporating probate avoidance strategies such as the following into your comprehensive estate plan:
- Establish a Revocable Living Trust: Creating a revocable living trust is a highly effective probate avoidance strategy for New Hampshire residents. By transferring your assets to a trust during your lifetime, you can retain control over those assets while ensuring that they pass directly to your chosen beneficiaries upon your death, bypassing the probate process. In New Hampshire, revocable living trusts can help avoid the complexities of probate and provide for the efficient transfer of assets to beneficiaries. The same trust can help accomplish a variety of other estate planning goals, such as protecting assets intended for minor children, staggering an inheritance left to a young adult beneficiary, and planning for the possibility of your own incapacity. Working with an experienced estate planning attorney can help ensure that your trust is properly drafted and funded in accordance with state law.
- Utilize Beneficiary Designations: Certain assets, including financial accounts, may offer the option to make them a “payable-on-death (POD)” or “transfer-on-death (TOD)” account. By designating beneficiaries directly on these accounts, you can ensure that they pass outside of probate and are transferred directly to your chosen beneficiaries upon your death. POD and TOD accounts are not the same as joint ownership. With a POD or TOD designation, the named beneficiary has no legal rights to the assets held in the account while you are alive; however, the account ownership immediately transfers to that beneficiary upon your death without the need to go through probate. Ownership of the assets involved in a retirement account or life insurance policy also transfers directly to the named beneficiary, outside of the probate process. It is essential to review and update beneficiary designations regularly to ensure that they align with your overall estate plan and reflect any changes in your circumstances or preferences.
- Joint Ownership with Right of Survivorship: Joint ownership with rights of survivorship is another probate avoidance strategy that can be particularly useful for New Hampshire residents. By holding assets jointly with someone else and specifying right of survivorship, you can ensure that ownership of the asset automatically transfers to the surviving joint owner(s) upon your death, avoiding probate altogether. Common examples of assets held in joint tenancy with right of survivorship in New Hampshire include real estate, bank accounts, and investment accounts. While this type of joint ownership can be an excellent probate avoidance strategy, make sure that you consider the implications of joint ownership and consult with a knowledgeable estate planning attorney before deciding to add someone’s name to the title of your home or other valuable assets.
- Make Lifetime Gifts: Making lifetime gifts of your assets can be an effective probate avoidance strategy for New Hampshire residents looking to reduce the size of their taxable estate and ensure that assets pass directly to beneficiaries outside of probate. While lifetime gifting is a frequently utilized probate avoidance strategy, be mindful of the potential gift tax implications of lifetime gifting. Remember that federal gift and estate taxes are imposed on the combined value of estate assets owned at the time of death and the value of qualifying gifts made during your lifetime. Making use of the annual exclusion is one way to make tax-free lifetime gifts. The annual exclusion lets you make gifts valued at up to $18,000 per year (as of 2024) to an unlimited number of beneficiaries. Gifts made using the annual exclusion do not count against your lifetime exemption limit.
To ensure that your probate avoidance strategies are successful and work as intended within your estate plan, be sure to work closely with an experienced estate planning attorney familiar with New Hampshire probate laws to develop a comprehensive estate plan tailored to your specific needs and circumstances.
Do You Need Assistance with Probate Avoidance Strategies in New Hampshire?
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about probate avoidance strategies in New Hampshire, contact our estate planning attorneys in our North Andover, Woburn, and Beverly offices at (978) 969-0331. Our Salem and Nashua, New Hampshire office can be reached at (603) 894-4141.
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