Probate is a process under which a decedent’s estate is administered, claims against the estate are resolved and property is distributed to the heirs. It can be lengthy and costly. However, not all property goes through probate. The following types of property bypass the probate process altogether.
Accounts with designated beneficiaries
Most financial institutions allow you to nominate a “Pay on Death” (POD) beneficiary to whom the account is transferred after you pass away. Similarly, the proceeds of financial products, such as pension plans and life insurance policies, are paid to designated beneficiaries.
Jointly owned property
Bank accounts and securities may be jointly owned — the account will be re-titled in the sole name of the survivor when the first owner passes away. Real estate may be owned by two or more individuals as joint tenants with “right of survivorship” — when a joint tenant dies, the property passes automatically to the surviving owner or owners. You can convert a joint tenancy of real estate into a tenancy in common by an act of severance, for example, by transferring your interest in the property to someone else.
If you are married, you can also own real estate as tenants by the entirety. Similar to a joint tenancy, when one spouse dies, the property automatically passes to the surviving spouse. However, unlike a joint tenancy, one owner cannot unilaterally sever a tenancy by the entirety.
Property transferring to a living trust does not undergo probate. You can continue to use or dispose of property transferred to a revocable living trust during your lifetime and can make changes, as well. There are provisions in all kinds of trusts as to who receives the trust property after you pass away.
Whether any or all of these measures are appropriate for you depends upon your circumstances, including the size of your estate. An experienced Louisville estate planning lawyer can devise an estate plan customized to your particular needs. Contact us at Brightwell Law to schedule a consultation.