Probate is the legal process of administering an estate after an individual’s death. While probate could be advantageous in some situations, most Kentuckians try to avoid probate because the process can be complicated, take a long time, and involve significant expenses. Probate is a court-supervised process that includes validating a will, appointing an executor or administrator of the estate, distributing the individual’s property, and allowing creditors to state their claims to assets. During probate, the personal representative may require legal guidance to properly carry out their duties, and estate administration costs and fees can consume as much as 5% to 7% of the estate — money that would otherwise have passed to the beneficiaries.
There are many techniques for avoiding probate that allow ownership of a person’s real or personal property to pass directly to their desired beneficiaries. However, Kentucky probate laws are complicated; everyone’s situation is different; and making mistakes can be costly. To ensure your beneficiaries receive what you want them to with a minimum of delays and problems, it is important to plan your estate now, while you are of sound mind and able to do so.
To make sure everything is done properly, it can help to have a consultation with an experienced Kentucky estate planning lawyer. Your lawyer can examine your individual situation, explain Kentucky laws and how they apply to you, determine what options for avoiding probate are right for you, and provide the peace of mind of knowing your loved ones will be provided for after you are gone.
Ways of Avoiding Probate in Kentucky
When people die, their taxable estate includes all the assets in which they had an interest at the time of death, but only those assets that are held individually have to go through probate. There are several ways that assets can be passed on to beneficiaries without going through probate. These include:
- Joint ownership or tenancy. When property is owned in joint tenancy with the “right of survivorship” and one owner dies, the asset automatically passes to the surviving owners without going through probate. Joint tenancy often works well when couples (married or not) acquire real estate, vehicles, bank accounts or other valuable property together. In Kentucky, each owner must own an equal share of the asset, and they must be titled properly.
- Tenancy by the entirety or community property with right of survivorship. These are forms of property ownership that function like joint tenancy. The survivor owns the entire property at the death of the other tenant. This category is only available to married couples.
- Policies and accounts with beneficiary designation. Certain policies and accounts, such as bank accounts, brokerage accounts, retirement accounts, annuities, and life insurance, allow you to name beneficiaries who will be able to receive the account assets or the policy proceeds upon your death.
- Assets in a Living Trust. Kentucky allows you to set up a living trust to avoid probate. To do so, you (the trustor) create a trust document that designates a person (a trustee) to hold property for another person (a beneficiary). If you are setting up a living trust, you can make yourself the trustee and keep full control over all property held in the trust while you are alive. You also designate a successor trustee, often a spouse or a child, to handle your property and distribute it to the trust beneficiaries after you die. You can place virtually any asset you own—real estate, bank accounts, vehicles, collections – in the trust, and your successor trustee will be able to transfer it to the trust beneficiaries without having to go through probate.
- Retitling real estate. You can retitle real estate from individual to joint ownership or use deeding techniques to automatically transfer the property to another upon death.
- Gifting property or money. You are allowed to give a certain amount of money each year to various individuals without having to pay a tax penalty. Kentucky does not have a gift tax; there is a federal gift tax exemption of $17,000, per recipient, as of 2023, so if you do not gift one person more than $17,000 in a year, you do not have to report it to the IRS. You should check with a tax-planning professional or attorney to minimize federal gift, estate, and generation-skipping tax liability.
- Utilize Kentucky small estate exemption. In some cases, your estate may qualify for Kentucky’s simplified “small estate” probate procedures. In Kentucky, small estates – those less than $30,000 (Ky. Rev. Stat. Ann. § 391.030) can go through an abbreviated process known as “summary probate.” This requires an individual to appear only once in court, and the process is over quickly. Kentucky’s simplified probate process for small estates is available where:
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- the will leaves no personal property
- there is a surviving spouse and the value of property subject to probate is $30,000 or less
- there is no surviving spouse and the proceeds will go to the children.
A surviving spouse can petition the court to get permission to withdraw up to $2,500 from a bank or depository account in the deceased spouse’s name before the summary probate is settled.
To determine whether an estate qualifies for this shortcut or whether it must be subject to regular probate, consult with a Kentucky estate planning attorney to review your options.
Get Help from an Estate Planning Attorney
The experienced Kentucky estate planning attorneys at Bunch & Brock are accomplished legal professionals with more than 35 years of legal experience. Offering comprehensive counsel along with friendly, personal service, we can provide legal advice and guidance to help you decide the best way to handle your estate planning, avoid probate, and protect your assets and pass them on to your heirs.
When you have our Kentucky estate-planning lawyers on your side, we will help you and your family on a wide range of estate planning and probate matters, providing personalized service based on your needs. To learn more about our legal team, you can read our attorney bios.
