Upon a person’s death, his estate enters a process called probate through which their assets are managed, settled, and distributed. If the decedent left a valid will, this process is carried out according to his wishes. However, some people want to avoid probate at all costs. A recent article outlined several ways through which this may be accomplished for certain assets.
It is first important to understand what property is typically passed through probate. Generally, any item that a person owns completely and individually will pass to beneficiaries through probate. In order to change from this default, a person must set up a transfer outside of their will for each asset which he or she does not want probated. These methods include POD accounts and joint ownership.
Payable-on-Death Accounts: Most financial institutions offer the option of making a bank or investment account payable-on-death. Upon the account holder’s death the named beneficiary will inherit the account. This transfer is automatic, and outside of probate. Most financial institutions allow you to change the beneficiary of a payable-on-death account freely.
Joint Ownership: Holding assets in joint ownership also allows a person to avoid probate for the particular assets. Joint ownership must be approached with caution, however, because it may have unintended consequences on trust planning.
