The probate process can take a long time and may get complex. When doing their estate planning, some people make it their goal to avoid this. One way to do it is by using beneficiary designations.
A beneficiary designation can be used on a retirement plan, a life insurance policy, and things of this nature. Essentially, you’re just saying that the account in question should automatically go to the specified person upon your own passing. The company that manages that account will follow your wishes to the letter, and so the account leaves your estate without going through probate.
Take, for example, a life insurance policy for $200,000. If it just paid out to your estate, that estate would increase when you died. The money could then be split up by your will along with your other financial assets.
If you want to leave all of that money directly to a specific person, though, you just pick them as the beneficiary. When you pass away, the insurance company pays them directly. The rest of your estate still gets divided according to your will, but that $200,000 is never part of your estate. No one else can say they have a claim to it.
One important thing to note is that your beneficiary designations need to be updated along with your estate plan. Since they override your will, just changing your will is not enough to accomplish your goals.
Considering your options
You can see that you have plenty of estate planning options. Make sure you consider them carefully when deciding what to do with your assets after you’re gone.