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How to Avoid Probate using Transfer on Death Accounts and Registration

How to avoid probate using transfer on death accounts and registration

Why Avoid Probate?

Estate planners often suggest that an individual structuring their assets to be passed on to beneficiaries after their death try to avoid the probate process if possible. Estate planners recommend avoiding probate since control of how assets is reduced in the probate process and probating an estate is a more costly and time consuming method of disposing of an estate.

How to Avoid Probate?

Whether an estate enters, probate depends on how assets are structured in an estate plan. As a preliminary matter, there is not a single method by which to avoid probate, accordingly one cannot simply state in their will that the estate should not be probated. Rather, each class of estate assets has to be designated in a way that does not trigger the need for the estate to be administered by the probate court. An estate plan should be structured in a manner that exposes the least amount of assets to being administered in probate. Some estate planners may be able to shield all estate assets from probate if the estate is smaller or involves a less complex array of assets. However, the more likely strategy needed to avoid probate would involve structuring the estate so as to keep as many assets as possible under a designation to avoid probate.

The following types of assets or arrangements do not require administration by a probate court. Estate planners often suggest that individuals place their assets in joint ownership or designate them as a transfer on death assets. The benefit of using these two strategies rest in the fact that upon the death of one of the co-owners of the property, it automatically transfers to the surviving owner without the need for court involvement. This strategy is used primarily for real estate, real property and for accounts such as a bank or investment accounts.  

Real Estate Property Held in Joint Ownership

Joint ownership of real estate allows the surviving owner to assume full ownership upon the death of one owner. Rather than indicating in a will, that real estate should transfer to an heir or beneficiary, thereby requiring probate court involvement, the property may be titled as jointly owned by co-owners.

Under this arrangement, joint ownership of assets includes the “right of survivorship,” whereby the surviving owner of the property is granted full ownership upon the death of a co-owner. Since the transfer of assets is triggered automatically through the right of survivorship, there is no need for probate court.  

Transfer-On-death Registration

For estate assets involving real property, such as vehicles, securities, bank accounts and stocks and bonds these assets can be designated as transfer-on-death; whereby the testator remains the owner of the property until death and is then transferred to a designated beneficiary. Transfer of death-designated assets must be recorded like any other deed of ownership. Further, under transfer-on-death arrangements the beneficiary holds no legal title to the property until the owner’s death. As such, this arrangement acts as a method of transferring property upon the death of the owner without cost and time of probating a will.  


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