There are several ways to avoid probate. Normally, assets in your name alone are the only assets that pass through probate. Therefore, if assets are held jointly, have a named beneficiary, or otherwise qualify to avoid probate, the assets will pass to the surviving joint owner or beneficiary, and these will not pass through probate.
Of course, there are always issues that may cause an asset to be probated even though it may be held jointly with another person. In this type of situation, when you create your Will you may specifically state within the document that although assets are in joint names, they may be jointly held for convenience, but the assets are supposed to pass pursuant to the terms of your will to the beneficiaries designated in their respective percentages. Therefore, the rebuttal of the presumption that joint ownership may be specified by the Testator should be included specifically within your will, but only if the language is clear that the specific asset, or all assets are to pass pursuant to the will and not to the surviving joint owner or beneficiary. In most of these cases, there is significant disagreement within the parties, and court action is needed to resolve the outstanding conflict.
There are several ways to easily avoid probate. The first is to have the ownership of the account be specific, that it is jointly held with rights of survivorship to be provided to the survivors as between the co-owners of the account. In this method, you create a true joint ownership, for instance with children. In the event that any one of your children predecease you, then you would get a portion of your assets back, and their assets would not be probated, thus, they will not pass to the surviving child’s spouse and/or children. It must be remembered that when these types of account are created, any one of the joint owners may be able to withdraw all of the funds from the account at any time, and in the event that any one of the joint owners is sued, his or her share of the account may be attachable or reachable by their creditors and possibly their former spouse, if the asset is not otherwise protected.
Another way of protecting assets is to name a beneficiary on your life insurance, 401K plan, IRA, etc. Doing so allows you to designate the beneficiaries and the shares of the assets they are receiving.
Another option is to create what is known as a TOD or POD account. These stand for “Transfer on Death” and “Payable on Death.” The TOD option is normally used with securities, stocks, bonds, or a brokerage account. Here you have total control over the account during your lifetime, but upon death, the assets pass directly to the beneficiaries in the shares and percentages that you designate. There may also be a significant portion left to charity, friends, or other relatives, and you may change beneficiaries or percentages in the future.
The POD, or Payable on Death, is normally used with bank accounts, i.e., savings, checking, money market, CDs, etc. Similar to the TOD account, the POD names beneficiaries and the proportions to allocate funds. It is important to be sure that the terms of your Will and Trust, if any, are coordinated with the beneficiary designations to insure that your intentions are secured. In many cases you may also have your account owned by you and payable to your trust. However, not all financial institutions and states allow this type of transaction. If available though, this is an excellent way to maintain your assets and make sure they pass through your trust, but also do not pass through the probate process.
Hyman G. Darling, Esq.