During probate of an estate, the court oversees the management and distribution of a deceased individual’s assets. Additionally, all outstanding debts of the estate are paid. An executor or administrator of the estate will be appointed to carry out the necessary tasks of probate. The logistics and necessities of going through probate can be quite time consuming as well as expensive. With proper planning, much if not all of probate can be avoided. This can be accomplished by structuring your estate in a way that allows for your assets to pass directly to your beneficiaries without requiring probate. By doing so, the assets that avoid probate can be transferred faster to beneficiaries. The assets and transfer will also enjoy more privacy as the transaction will not end up in the public record, unlike probate proceedings which do become a matter of public record.
Which Assets Avoid Probate?
There are many assets that do, in fact, avoid probate. The major classes of assets that do not need to go through probate include: property held jointly (with rights of survivorship), property with a designated beneficiary, and property held in trust. This can cover the bulk of a person’s assets. This is especially true of an individual who was married and has a surviving spouse. In this type of case, almost all of the deceased individual’s assets will pass directly to the surviving spouse without the need for probate.
Property that is held jointly with rights of survivorship will pass directly to the co-owner of the property without the need for probate. The property will automatically transfer to the remaining living owner. Jointly held property with rights of survivorship often comes in the form of real estate, but really any property that comes with a title document may be held jointly. This means that things such as motor vehicles and other property may be held jointly with rights of survivorship.
There are also a variety of assets that may have a designated beneficiary. Many types of property and financial accounts allow for either a Pay On Death (POD) or Transfer On Death (TOD) designation. Life insurance policies, bank accounts, and other financial accounts, such as IRAs, allow for POD designation. Other financial assets such as stocks and bonds, along with other types of securities, allow for a TOD designation. Upon the death of the account or policy holder’s death, the assets will transfer automatically to the designated beneficiary, without needing to go through probate.
Trusts are often utilized in estate planning for the many benefits it can bring. One major benefit of establishing a trust is the fact that property owned by a living trust, whether it be revocable or irrevocable, will not need to go through probate. Upon the death of the trust settlor, the property held in trust will pass to the beneficiaries according to the terms of the trust. It is important to note, however, that sometimes a Last Will and Testament creates a trust, or transfers assets to a trust already in existence. In this type of case, the property to be transferred to the trust must go through probate.
Trusts and Estates Attorney
The benefits of estate planning sooner rather than later are many. The sooner you take action to establish an estate plan structured to protect and further the needs of you and your loved ones, the more options you have. Monk Law is here to talk to you about your options and what works best for you and your family. Contact Monk Law today.