I often am asked by clients how they can avoid probate. In some situations, it is appropriate to take legal action prior to an individual’s death to avoid probate. In this article, I discuss a few ways assets may be transferred outside the probate process. To determine whether avoiding probate is the best approach for your estate, consults an estate planning attorney in your state.
Bank accounts, retirement accounts and investment accounts typically allow you to name a beneficiary to receive the assets in the account in the event of your death. This is sometimes referred to as “pay on death,” or POD. Accounts may also be “transfer on death,” or TOD. The process to set up an account that will pass outside of probate usually involves filling out a form where you designate a beneficiary. Upon your death, the named beneficiary can provide a death certificate, along with proof of identity, in order to obtain the funds in the account. All of this can be easily accomplished without hiring an attorney or going to court. However, if an account does not have a POD, TOD, or beneficiary designated, then the account must go through probate, either with a will or an intestate administration proceeding, before heirs can access the account.
Creating a revocable living trust allows you to control your assets, pay your bills, and then, upon your death, have those assets pass directly to other individuals while avoiding probate. The person who creates the trust is called the Grantor. The Grantor also may be the trustee of the trust. While you are alive, you may access the funds in the trust; however, in the trust document, you will name the beneficiaries to receive the trust’s assets upon your death. The trust also may include provisions regarding your wishes in the event you become incapacitated and are unable to deal with your own affairs. Assets in a revocable living trust do not go through the probate process.
Any assets you give away during your lifetime are no longer your property at the time of your death. Thus, making gifts while you are still alive is another way to transfer assets outside of probate.
Elliot Schlissel is an attorney licensed to practice in the State of New York. His law firm, with offices in Nassau County, Suffolk County and Queens County, practices in family law & divorce, criminal law, personal injury matters, bankruptcy, and foreclosure defense.