Probate is just the court administered transfer of property after their death. Not all property is subject to the court process and sometimes it doesn't make sense to initiate a probate proceeding.
Some property doesn't have to be admitted to probate in order to transfer. Think about your bank, brokerage or life insurance accounts. Often times these accounts are transferable by the beneficiary designations. When you initially opened these accounts you were probably asked to select a beneficiary. Because these accounts are contracts between you and the bank, brokerage or insurance company, the beneficiary designation will direct whoever holds your account to transfer it to your beneficiary after your death.
Below is a snip from the Servicemember Group Life Insurance application.
If you read the language carefully it says "If you do not specifically name beneficiaries, your insurance will be paid by law." What this often means is that if you don't designate a beneficiary the accounts will be paid to the estate and administered by the court.
While this is a quick and inexpensive way to transfer property after death it is very limited. Like the picture above, most companies will allow you only a few options on how you want to distribute the account. If you want to split the proceeds in a more complicated way you will need a more involved estate planning.
Keeping Beneficiary Designations up to Date
Using a beneficiary designation is only helpful if it is accurate. I suggest that you review your accounts annually to make sure the designations are accurate and up to date. It's not uncommon to find former husbands and wives as beneficiaries on accounts years after a divorce. That is not a situation anyone wants to deal with your passing.
Transferable on Death Deeds
A few years Oregon adopted a Transfer on Death Deeds. I believe most states have adopted them at this point. Much like their name implies, these deeds transfer title in real estate on your death. TODD are one of the most loved estate planning tools if you have an uncomplicated family. The primary reason an estate has to be admitted to probate is real estate. Removing real estate from the equation may let you avoid probate or allow you to settle the estate via the Small Estate process.
I've inserted a snip from ORS 93.975 that provides the form for TODD deeds.
If you only have one heir then a Transfer on Death Deed may make sense for you but anything more complicated and I would be leery of using it.
Often times someone will die owing more money than their estate is worth. When this happens, heirs sometimes decide to just walk away and let the banks foreclose on the property.
If you have any questions about how probate works or what property is included, please feel free to contact me.