Your Estate Plan: Distributing Assets Outside of Probate

Your Estate Plan: Distributing Assets Outside of Probate

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As advocates of good estate planning, we work hard to make sure our clients understand they have a wide range of choices for reaching their goals. Generally, the goal is to avoid probate—the court process that can be costly and time-consuming. Goals are accomplished by organizing your estate so assets will be transferred without having to seek directions or authority from the probate court.

Transferring title into the name of your trust is an exceptionally important means to protect a variety of assets from probate—the primary one being real estate. Accomplishing a non-probate transfer of real estate requires establishing a trust and titling your real estate holdings in the name of the trust. For example, the deed to your home would list the property owner as the “Kling Family Trust” rather than Michael and Ann Kling, or an individual name. Since the trust document provides instructions for transferring property upon an owner’s death, there is no need for probate to determine the property’s new owner.

There are also some simple steps you can take to avoid the probate of smaller assets, such as a car or bank account. In Nevada, our Department of Motor Vehicles (DMV) allows vehicle owners to add a beneficiary to their motor vehicle title through a Transfer on Death (TOD) title. The vehicle owner must submit the Certificate of Title, a Transfer on Death Application, and a $21 title fee. The DMV will, in about 8 weeks, issue a new title with the beneficiary listed. Ownership of the vehicle will automatically pass to the beneficiary upon the death of all legal owners. The beneficiary must apply for a new title to complete the process and must also obtain a new registration before driving the vehicle.

Like the TOD title, a Payable on Death (POD) account designation identifies one or more beneficiaries to receive bank account assets upon the owner’s death. Holding an account with a POD designation allows the primary owner to maintain complete ownership and control of the account while living. Then, upon the owner’s death, the account will automatically transfer to the designated beneficiary without needing a probate court order.

Using beneficiary designations is another straightforward way to direct asset transfers without going through probate. Retirement accounts, life insurance policies, and certain brokerage accounts are frequently governed by beneficiary designations. Whomever you name on the appropriate form(s) will receive the assets upon the owner’s death. Notably, retirement assets are often controlled by Federal law and these beneficiary designations will override other estate planning provisions, including trusts, a will, or even directives in a divorce decree.

Coordinating title transfers, TOD titles, POD accounts, and beneficiary designations with your overall estate plan is essential to avoid conflicts or errors. An estate planning attorney can help align your actions with your intent. We encourage you to call Kling Law Offices for a complimentary consultation to insure your planning achieves your goals and desires.

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