This article is part of the Biblically Informed Framework for Retirement Stewardship (BIFRS) series. It was originally written in November of 2022 and updated in May of 2026.

My wife and I recently assisted a widow in our church with some legal and financial issues after her husband’s passing. They had their affairs in order—a will and a living trust—yet there were still accounts requiring probate, and the process took multiple trips to the Clerk of the Superior Court, over a month of processing time, and considerable paperwork. It was instructive.

That experience prompted me to think: Will my wife have to walk through a similar process? And what can people do to spare their loved ones that burden?

Probate in North Carolina takes a minimum of four months, and fees can run $2,000 to $10,000 or more, depending on complexity. Most people, once they understand this, want to minimize how much of their estate must pass through probate—both for simplicity and to protect those they love from unnecessary delay and expense.

Option 1: Joint ownership of financial accounts

Joint ownership is the simplest probate-avoidance strategy for spouses. When one joint owner dies, the account passes automatically to the surviving owner without probate. Standard checking and savings accounts work this way when held jointly with right of survivorship.

One important limitation: retirement accounts such as 401(k)s and IRAs cannot be owned jointly. They must pass through designated beneficiaries—addressed in Option 3 below.

Option 2: Joint ownership of real Estate

Spouses typically own their home jointly, which means it passes automatically to the surviving spouse at death. Adding an adult child or other non-spouse beneficiary to the deed as a joint owner is more complicated and carries meaningful risks.

Adding a non-spouse to the deed may constitute a taxable gift. The 2026 annual gift tax exclusion is $19,000 per recipient (up from $18,000 in 2025)—so if the deemed gift value is below that threshold, no gift tax return is required. But if the property’s value exceeds $19,000, you may need to file a gift tax return and count the excess toward your lifetime exemption.

The capital gains issue is potentially more significant: if the beneficiary assumes ownership while you are still alive and subsequently sells the property, they owe capital gains taxes based on your original purchase price (cost basis), not the value at inheritance. By contrast, property inherited at death receives a “stepped-up” cost basis equal to its fair market value at the time of death, which dramatically reduces capital gains exposure. This is a powerful reason to avoid transferring real estate while alive when the purpose is estate planning rather than a genuine gift.

Option 3: Payable-on-Death (POD) accounts

Designating a beneficiary on any financial account—bank accounts, brokerage accounts, retirement accounts, life insurance, savings bonds—makes it a payable-on-death account. At death, the funds transfer directly to the named beneficiary without probate. This is simple, free, and highly effective.

Most institutions allow both primary and contingent (alternate) beneficiaries. A typical arrangement names a spouse as primary beneficiary and children as contingent beneficiaries. You can also name charitable organizations that meet IRS 501(c)(3) requirements as beneficiaries.

My wife is the designated beneficiary of my IRA accounts at Fidelity. Should I predecease her, she claims the assets directly from Fidelity, who will help her establish an Inherited IRA—which, under current rules, provides the most favorable tax treatment for a surviving spouse. Once she has taken possession, she can update her own beneficiary designations as she sees fit.

Option 4: Transfer-on-death (TOD) arrangements

Many states allow transfer-on-death vehicle registrations and TOD deeds for real estate, enabling these assets to pass directly to named beneficiaries without probate. North Carolina does not currently offer TOD deeds for real estate or TOD vehicle registrations. Residents of NC must rely on other strategies—joint ownership, trusts, or making real estate part of a will—to handle these assets.

If your state does offer TOD deeds, they function similarly to POD beneficiary designations: you name a beneficiary while you are alive, the deed is recorded with your county, and at your death the property transfers automatically. The beneficiary receives a stepped-up cost basis, avoiding the capital gains problem described under Option 2.

Option 5: Revocable living trust

Property held in a revocable living trust is not part of your probate estate. When you die, the trustee can transfer trust assets to beneficiaries quickly and privately, without court involvement. Trusts also offer more control over distribution—you can specify conditions (education, milestone birthdays, discretionary distributions) that a simple will cannot impose.

I had a living trust when my children were younger to manage guardianship and provide for them if my wife and I both died early. We dissolved it when we redid our wills, as our children are now grown. However, I am reconsidering this—particularly because our house and vehicles in North Carolina cannot pass via TOD, so they would need to be in a trust to avoid probate entirely.

Trusts have real upfront costs (attorney fees of $1,500 to $3,500 or more) and require the discipline to actually “fund” them by re-titling assets into the trust’s name. Unfunded trusts provide little benefit. But for those who want maximum control over distribution and the cleanest possible transition for heirs, a trust is often the right tool.

Option 6: Gifts during your lifetime

You cannot face probate on assets you no longer own. Giving property away during your lifetime removes it from your estate and eliminates any probate concern—though gift and estate tax rules apply.

In 2026, the annual gift tax exclusion is $19,000 per recipient. You can give up to $19,000 to any number of people each year without filing a gift tax return. Married couples can combine their exclusions, giving $38,000 per recipient annually. Amounts above the exclusion reduce your lifetime gift/estate exemption but are not immediately taxable.

The federal lifetime estate and gift tax exemption in 2026 is $15 million per person ($30 million per married couple), following the One Big Beautiful Bill Act signed on July 4, 2025. This is permanent and indexed for inflation going forward, eliminating the “use-it-or-lose-it” urgency that existed before the OBBBA. The 40% estate tax rate still applies to amounts above the exemption, though it affects only the wealthiest estates.

The Tax Cuts and Jobs Act of 2017 (TCJA) had temporarily doubled the federal estate tax exemption, which was scheduled to sunset at the end of 2025, reverting to roughly $7 million per person. The OBBBA (signed July 4, 2025) permanently increased the exemption to $15 million per individual / $30 million per married couple starting January 1, 2026, with annual inflation indexing thereafter. The sunset was eliminated. For most readers, this change is largely academic—the exemption was already high enough that federal estate taxes didn’t apply. But for those with estates approaching or exceeding $7 million, the urgency to make large gifts before year-end 2025 has now passed. The more relevant planning concerns for most people remain income taxes, beneficiary designations, and the probate avoidance strategies described in this article.

Option 7: Simplified probate for small estates

Almost every state offers a simplified or expedited probate process for small estates. In North Carolina, the simplified estate threshold is $20,000 for personal property (not including real estate). Estates qualifying under this threshold can avoid the full probate process. Other states have significantly higher thresholds—some as high as $500,000. Check your own state’s rules if you think a simplified process might apply to your situation.

What we’re doing

Given what I have learned, my wife and I are seriously revisiting the question of a simple living trust. If we establish one, we’ll likely fund it with our house and vehicles—the assets that cannot pass via POD designations—while continuing to use beneficiary designations for our financial accounts.

A final note on theology: as I have written elsewhere, notwithstanding Proverbs 13:22, the Bible does not command Christians to leave an inheritance. You are free to spend it all or give it away. But if leaving something to heirs and doing so gracefully is your desire, the strategies in this article can help you do that with minimal burden on those you love.

OLD

My wife and I recently had the privilege of assisting a widow in our church with some legal/financial issues after her husband’s passing. It was my first experience with the “Clerk of the Superior Court” in my county.

Fortunately, this woman and her husband had their affairs in order. They had a will and a living trust, ensuring their property and financial accounts would easily pass to her upon his death. However, the will had not been probated, and she needed access to some funds that had been paid to her husband’s estate in an account she did not have access to because they were not held in the trust.

Hence the trip (actually two) to the clerk’s office with an additional trip to her bank. It took about a month for the county to process the paperwork, which is itself instructive: These things take time, and one unfilled line, checkbox, or missing signature can start the process all over again.

I won’t go into all the other details, but suffice it to say that it was not a simple matter to resolve (and, as I write this, it still isn’t), even though the will does not have to be probated to address it.

The issue

As I reflected on this experience, I thought: Will my wife (or our children after we’re both gone) have to walk through a similar process? I no longer have a living trust, which may necessitate my will be probated should I predecease my wife. However, we hold most of our assets in “joint tenancy,” and when we don’t (my IRA accounts, for example), my wife is listed as my beneficiary.

Still, as with the widow in my church, there could be a situation where the will would need to be probated, even if I have a trust. In those situations, going to the clerk’s office (which felt a little like being at the DMV, even though they were pretty helpful) and getting all the required legal forms completed and notarized was a little challenging.

I understand that probate can be much more complicated (and take much longer). According to Trust & Will, probate takes a minimum of four months in my state (NC), and “fees can often run anywhere from $2,000 – $10,000 or more, depending on how complex the estate is.” Frankly, I had no idea it could take that long or cost that much.

I now think most of us should consider having a strategy to avoid probate for the sake of those we leave behind, if possible. I don’t like to think that my wife may have to deal with that after I’m gone, even though she’d likely have friends or family to help.

The next question that arises is this: How can we avoid probate, at least for the majority of our property and financial assets? And do I need a living trust?

The options

There are several relatively simple and effective ways to ensure that some of our property and financial assets pass directly to our heirs (or charities, or both) without going through probate and without a living trust.

State laws differ on this, and as we’ll see, depending on where you live, some things are best handled with a trust.

1) Joint ownership of financial accounts

Joint ownership of financial accounts provides a simple and easy way to avoid probate when one owner dies. When one owner dies, the property goes to the other joint owner—no probate involved. Think “joint checking and savings accounts.”

One issue is that retirement accounts, such as 401(K)s and IRAs, can’t be owned jointly, so they must be addressed differently—what is legally defined as “pay-on-death” account designations (see #3 below).

2) Joint ownership of real estate

This is where a husband and wife own property together (i.e., both names on the deed) or when a beneficiary is added to the deed, thereby becoming a joint owner.

This is usually considered a good idea for husbands and wives. However, with non-spouses (e.g., a child), there are some important considerations.

First, if you add a beneficiary to the title while retaining joint ownership, the title will stay in the probate court’s purview. It would not if you relinquish ownership and name your beneficiary(ies) the sole owner(s).

Second, adding a beneficiary to the deed gives them a gift per the IRS laws for tax purposes. Whether your beneficiary would have to pay any gift tax is another matter. You can read the IRS rules on gifts to family members HERE or consult a tax professional.

The third thing is capital gains, probably the most significant potential “gotcha” to consider. These taxes can be significant (up to 20% for higher-income people).

If your beneficiary assumes sole ownership while you are still alive and wants or needs to sell the property within two years, that will trigger the long-term capital gains taxes; they will have to pay them on the appreciated value of the property since you first purchased it.

However, if you sell it as the original owner, you would be eligible for an exclusion of up to $500,000 (as a married couple) as long as you lived in the property for at least two of the previous five years.

3) ”Payable-on-death” accounts

By designating a beneficiary, you can make almost any bank or retirement account a “payable-on-death” account. You can do the same for government bonds and corporate stocks and bonds, and brokerage accounts. (The mechanism for doing this may be as easy as completing an online form.)

Most financial institutions allow account owners to designate both a primary beneficiary and a contingent (alternate) beneficiary, who would be entitled to the funds if the primary beneficiary didn’t survive the account owner. (It’s common, for example, for someone to name their spouse as the primary beneficiary and the children as contingent beneficiaries.)

You can also designate an entity, such as a church or ministry, as a beneficiary providing they meet IRS requirements as a registered 501(c)(b) charitable organization.

When you die, the money in the account goes directly to your beneficiary (or beneficiaries) without going through probate.

My wife is the beneficiary of my retirement accounts. That information is registered with Fidelity Investments, the brokerage that holds them. If I should predecease her, it’s up to her to claim the money directly from Fidelity. They would help her to set up an Inherited IRA account, which would be optimal for her from a tax standpoint.

Note: A beneficiary’s options (and the tax implications, such as the RMD rules) depend on the kind of retirement account, the beneficiary’s relationship to the deceased, and how old the deceased person was.

Once she has taken possession of the funds, she can change the beneficiary arrangements if she desires.

4) ”Transfer-on-death” (TOD) arrangements

Many states also allow transfer-on-death vehicle registrations, and the majority of the states also now allow transfer-on-death deeds for real estate. You can use these tools to transfer your cars and real estate to someone else after your death without probate.

My state (NC) does not offer these options. (You can check on yours for real estate HERE or vehicles HERE.)

If your state allows TOD deeds, you can pass your interest in your home on to a beneficiary while you’re alive. The TOD has to be recorded with your county recorder of deeds, and when you (and your spouse if jointly owned) pass, it would automatically go to your beneficiary.

This functions like your beneficiary inheriting the property but without probate. (Estate taxes may apply, but usually not.)

Your beneficiary won’t owe any income tax on the home’s value, but should they decide to sell it, they’ll have to pay capital gains tax based on the home’s value on the date they inherited it. This is the “stepped-up” capital basis for paying taxes on an inherited house. (That would result in a much lower capital gains tax than under option #2 above.)

If they choose to rent or occupy it, they would owe no tax for as long as they own it. If and when they sell it, they may owe capital gains based on the appreciation above the “stepped up value” because those who inherit property aren’t eligible for capital gains tax exclusions like regular homebuyers are.

5) Revocable living trust

The widow friend from our church I mentioned earlier had a living trust. A trust can be used to avoid probate because property or assets held in the trust are not part of your probate estate. However, they are counted as part of your estate for federal estate tax purposes.

But most people won’t owe any taxes. That’s because a ”trustee”—not you as an individual—owns the trust property. After your death, the trustee (who can also be your beneficiary) can easily and quickly transfer the trust property to whomever it was left to without probate.

I had a living trust when my children were younger because it was the best way to address guardianship issues and future financial provision if my wife and I passed away before they became adults. We dissolved the trust when we redid our wills, but as you might guess, we’re reevaluating that decision.

Because I can name my spouse, children, and even entities (like my church) as beneficiaries of my Fidelity retirement accounts, I don’t need to include them in a trust to avoid probate. I would, however, keep them in my will to ensure that things are handled correctly.

Because our house and vehicles can’t be bequeathed via a TOD action, they must be included in the trust. That’s easy enough to do in the trust document itself, but I would also have to change the deed and car title ownership to the name of the trust. That requires a legal filing with the county court and a visit to the DMV—ugh!

6) Gifts

Giving away property while you’re alive helps you avoid probate for a very simple reason: If you don’t own it when you die, it doesn’t have to go through probate (duh!). That lowers probate costs because, as a general rule, the higher the monetary value of the assets that go through probate, the higher the expense.

In 2023 you can give away $17,000 per person without filing a gift tax return.

7) Simplified procedures for small estates

Almost every state offers shortcuts through probate—or a way around it completely—for “small estates.” Each state defines that term differently, but estates that are especially simple or small in value can skip probate or go through streamlined probate. If you think your estate will qualify, you may not need to take elaborate measures to avoid probate.

You can learn more about this and see if your state has such a procedure HERE.

What next?

Given everything I’ve learned, I think my wife and I may revisit our decision not to have a simple living trust. If I do set one up, I’ll probably ‘fund it’ with our house and vehicles so that our heirs can avoid probate.

Our bank and retirement accounts can be handled with beneficiary registrations supported by our will. Still, our other possessions can’t pass via our will without probate since, in NC, they have to be valued at less than $20,000 (in some states, it’s as high as $500,000). Therefore, some of those must also be included in the trust to avoid probate.

A final note: As I have written before, Prov. 13:22, notwithstanding, I don’t believe Christians are required to leave an inheritance to their children or anyone else. If you want to spend it all or give it away while alive, you’re free to do that. However, if you want to leave something to your heirs and avoid probate for their benefit, this article may help you.