There is a legal process called probate that comes into play under many circumstances when assets are being transferred after someone dies. One way to describe probate property would be property that was in your sole, direct possession at the time of your death.
Every asset transfer would not be subject to the probate process, because property that is being transferred may not fit the above description. Let’s look at some types of asset transfers that would not be subject to the probate process.
Living Trusts
You could convey property that would otherwise be probate property into a revocable living trust. While you are living, you would still have control of this property, and you could dissolve the trust and take back direct possession of the property at any time.
In the trust declaration, you name a trustee to administer the trust after you are gone, and you include instructions with regard to the way that you want the assets distributed. After your passing, the trustee would follow your instructions, and assets would be distributed among the beneficiaries outside of the probate process.
Property Held in Joint Tenancy
Joint tenancy is co-ownership of property, and it typically comes with something called right of survivorship. You could add a joint tenant to the title of your home. After your passing, the joint tenant would inherit the entirety of the home. The probate process would not come into play.
We should point out the fact that joint tenancy can sound like a simple solution, but you are giving the joint tenant half ownership while you are still living, and this can potentially present problems on a number of different levels.
Transfer on Death Accounts
If you open an account at a bank, you can add a beneficiary. This is called transfer on death or payable on death account. There are also brokerages that offer payable on death accounts.
While you are living, the beneficiary would have no access to the funds in the account. After you die, the beneficiary would assume ownership of anything that may remain in the account, and the probate court would not be involved in the transfer.
Life Insurance
When you take out a life insurance policy on your life, you name a beneficiary who will receive a payout after you die. Upon your passing, the company will pay out the proceeds to the beneficiary, and this transfer would take place directly, free of the probate process.
Learn More About Probate
If you would like to obtain some in-depth information about the probate process, download our special report. This report is free, and you can access your copy quickly and easily through this page: Free Probate Report.
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