A large portion of estate planning really focuses on how property and assets are to be transferred upon a person’s death. It may seem like a detail to some, but how your property is transferred when you pass away can have a significant impact on things like how long your beneficiaries will have to wait until they are able to access an inheritance and how much of an inheritance may be whittled away by things like taxes and court costs and fees. Here, we will discuss the different ways that property can be transferred at death.
How Is My Property Transferred at Death?
One of the most prominent and familiar ways that property is transferred at death is through a will, which goes through the probate process. A will, in large part, is put in place in order to outline a person’s assets and how he or she wishes those assets to be distributed. Once creditors are put on notice of an estate going through probate, they are permitted to make claims against the estate. Valid creditor claims will be paid off through the estate, as well other outstanding obligations, such as taxes and funeral expenses. Once all valid claims have been satisfied, then the rest will be distributed to the beneficiaries of the well according to its terms.
Probate, however, may not be the ideal way of having your property transferred to your heirs upon your passing. A notoriously lengthy and often expensive process, many try to avoid probate through using other options of property transfer mechanisms. For assets that can be held in joint tenancy with rights of survivorship, such as a home, a person’s property rights will automatically be transferred to the remaining joint owner upon his or her death. So, for assets that can be titled this way, you may want to have a joint owner on it.
Additionally, many accounts can be designated as payable on death. For instance, you can have your bank account as payable on death and you list who will benefit from this designation. When you die, rights to the account will automatically pass to the person you have listed. Similarly, things such as life insurance policies allow you to make beneficiary designations. Upon your passing, the proceeds of the policy will transfer to the listed beneficiary.
Trusts are another great way to transfer property outside of probate. A trust is established by the grantor and funded by transferring asset ownership to the trust. It is then managed by a trustee for the benefit of the beneficiaries. Upon the death of the grantor or another qualifying event, the trustee is tasked with distributing trust proceeds to the beneficiaries according to the terms of the trust. Because the assets held in the trust are considered to be owned by the trust, the trust property does not go through probate.
Estate Planning Attorney
To learn more about the ins and outs of estate planning, as well as its importance, Verras Law is here for you. We are here to answer your questions and design an estate plan you can count on. Contact Verras Law today.