Plan Ahead to Reduce Problems with Probate Issues
By: Lawyers.com - November 21, 2016
When you die, some type of legal procedure is needed to transfer title and ownership of your financial assets to others. The law provides for several ways of doing this, but estate laws differ a little from state to state. All jurisdictions recognize wills as a means of transferring property, but not all states honor transfer-on-death methods of changing title or ownership. It's always a good idea to speak with an attorney to make sure the method you want to use is available in your state.
Probate Transfers Title
Probate is the legal process that changes ownership of financial assets from a person who has died to other individuals. Probate assets are those that don't automatically transfer on your death by some other means. They include assets in your will plus any non-transferred assets.
Trusts Can Avoid Probate
Financial assets that you place in a living trust do not require probate for transfer. When you place these assets in a trust, you re-title them in the trust's name. The trust technically owns them. When you die, the trust can transfer ownership of your assets from itself to the beneficiaries you've named in your trust documents. If you neglect to re-title some of your financial assets into the name of your trust, a will can direct that these assets should move to your trust when you die. The assets left out of your trust would still require probate to re-title ownership into the name of the trust so your trust can ultimately transfer them to your beneficiaries.
Beneficiary Designations Avoid Probate
Some assets don't require probate because they name their own beneficiaries. These include retirement plans and life insurance death benefits. Probate isn't necessary because the policy or plan already addresses transfer under your state's contract laws. Ownership of these assets moves directly to your beneficiaries.
Some Assets Transfer on Death
Some states give you the right to name someone on a financial account or deed to inherit automatically without the need for probate. These assets include things like bank accounts and real estate. In some jurisdictions, you can designate bank accounts as "transfer on death" or "payable on death" accounts to go to an individual named by you when you die. Co-owned real estate can transfer the same way if the deed includes a survivorship clause. Without this language, the property must usually pass through probate to transfer full ownership to your co-owner.
An Estate Lawyer Can Help
The law surrounding the transfer of financial assets in an estate plan is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact an estate lawyer.
Article source: Lawyers.com