Probate is the process of presenting your Will to the Probate Court after your death, and having the Will allowed, ultimately passing title to your property to your intended beneficiaries. In Massachusetts, the probate process takes at least 1 year.
Only property in your individual name goes through your Will and the probate process. Property owned jointly or naming a beneficiary (i.e. life insurance, IRA's) pass directly to the joint owner or named beneficiary and do NOT pass via your Will or the probate process.
Some of the disadvantages of going through Probate are the costs (lawyer's fees and probate costs), the delay (1+ year process, delaying passing the assets to your intended heirs), and privacy (probate is a public process, and anyone can look at the filings).
You can avoid probate by setting up a Revocable Trust (also known as "Living Trust") and "funding" this trust during your lifetime (re-titling your assets into the name of this trust). By doing so, you lose no control and everything stays under your SS# and stays the same for taxes while you're alive.
In addition to avoidance of probate, funding the trust also provides you with the following benefits:
Management: In the event that you become incapacitated, there would be no need to appoint a conservator or guardian with respect to the property already owned by the trust - your successor trustee would continue to manage the trust property for your benefit during your lifetime
Privacy: When property passes at death via the trust (as opposed to your Will), it is private. No one will know who your beneficiaries are or how much money you had. Your Will and related probate documents, on the other hand, are public documents on file with the Probate Court, available for anyone to obtain.
Probate in other states: In addition to avoiding probate in Massachusetts (your state of residence), you also avoid "ancillary probate" (probate in any other state where you own real estate).
"Funding" Your Trust:
In order for the Trust to achieve probate avoidance, you need to re-title your assets into the name of the Trust.
Financial Accounts: If your financial institution allows a beneficiary or "tod" or "pod" (transfer on death or pay on death) it's simplest to keep the account in your own name and name the Trust as beneficiary or tod/pod. If none of those are allowed, you would open a new account in the name of the Trust (under your SS#) and move the existing account into the new Trust account.
Real Estate: To transfer your real estate into your trust, a new deed is prepared and recorded at the Registry of Deeds, along with a simple 1-page Trustee Certificate (so that the entire Trust does NOT have to be recorded at the Registry of Deeds). A new Homestead would also be recorded ($500,000 of creditor protection on your home, $1 million for couples both over age 62), now allowed for Trusts).
Avoiding probate and reducing estate taxes are two different matters. Even if assets avoid probate (by being owned jointly, naming a beneficiary, or being owned in a Trust), they still count as part of your taxable estate, and if the total (probate and non-probate) exceeds $1 million, the MA estate tax comes into play.
Also, although the Trust avoids probate, it does not shelter assets from the rights of a spouse or from the claims of creditors, or protect your assets from long-term care (i.e. nursing home) costs.