People generally need to include their most valuable assets in their estate planning paperwork. Assets that people fail to address could cause conflict among their family members. A typical testator carefully allocates certain property to specific family members based on people’s needs and personal relationships with the testator. Many people prioritize addressing tangible assets, like vehicles and real property.
They may also make a point of mentioning property with emotional significance to the family in their wills or other testamentary paperwork. However, other assets may also require careful consideration. For example, anything that must pass through probate court could be vulnerable to creditor claims and could also potentially trigger estate taxes.
Many testators specifically create estate plans in the hope of keeping some of their valuable property out of probate court. It is possible to directly transfer certain assets to beneficiaries after someone dies without them first passing through probate court. Financial assets are sometimes eligible for a planning tactic that bypasses probate.
People can directly transfer personal financial accounts
Financial resources, including retirement accounts and investment accounts, can contribute quite a bit to an individual’s net worth. Their accounts could hold thousands of dollars in liquid capital, and those funds could be at risk or a source of conflict during probate proceedings. Testators may want to arrange for their accounts to transfer directly to a specific chosen beneficiary.
Transfer-on-death paperwork can do exactly that. Someone chooses a specific beneficiary to take control over specific financial accounts. That beneficiary could be an individual, a business or even a trust. The account owner then files transfer-on-death paperwork with the financial institution. Transfer-on-death designations filed with financial institutions allow someone’s selected beneficiary to very quickly take control over that financial account after their death. The beneficiary simply needs to bring identification and a copy of the original account holder’s death certificates to the financial institution to take control of the account. Checking and savings accounts, as well as certain investment accounts, may be eligible for these special arrangements.
The fewer assets that have to pass through probate court, the less likely conflict is to arise during probate proceedings. Taking the time to address specific assets, via trusts, transfer-on-death arrangements, etc. can be as consequential as creating testamentary documents when thinking about the future and one’s legacy.