Michael learned about the implications of probate fees. What is one way he can effectively manage these fees?

Naming a beneficiary other than the estate is an effective way to manage probate fees because it allows the assets to bypass the probate process entirely. When an asset has a designated beneficiary, such as a life insurance policy or a registered account, it transfers directly to the named individual upon the owner’s death. Since the asset does not become part of the deceased’s estate, it is not subject to probate fees, which can often be a significant cost depending on the size of the estate.

This practice not only reduces the financial burden associated with probate but also helps to expedite the distribution of assets to the intended beneficiaries. It ensures that the loved ones receive their inheritance more quickly and reduces the administrative complexities often involved in settling an estate through probate.

In contrast, transferring all assets to a trust can be a strategy to avoid probate, but it may require more time, effort, and potential cost to set up and maintain. Listing the estate as the beneficiary on accounts would not help to avoid probate fees, as it would still necessitate the probate process to allocate those assets. Investing more in liquid assets does not directly address the issue of probate fees and may not change how probate is handled regarding the distribution of assets.