What is probate and why do I want to avoid it?
Probate is a court managed process that reviews the validity of a Will and oversees the distribution of assets to beneficiaries. If a person does not have a Will, then the assets are transferred to family members under a process outlined by state law. Because there is a lot of paperwork involved, this process can be time consuming and expensive.
When someone dies, the only assets that need to go through probate are those assets that: (1) the person owned solely AND (2) the person did not designate a beneficiary for those assets.
This means that if there are assets that are in just one person’s name, it’s always wise to name a beneficiary.
Naming a beneficiary is a very easy way to transfer assets. For example, assume that your neighbor Mary wants to leave her 1968 Corvette to her friend Jane. Mary is the sole owner of the Corvette. If Mary names Jane as a transfer on death (TOD) beneficiary of the Corvette, Jane will be able to go to the BMV after Mary passes, present the proper paperwork, and leave with the title in Jane’s name.
In a different scenario, say that Mary still wants to leave the Corvette to Jane, but Mary does not name Jane a TOD beneficiary. Instead, Mary simply leaves the Corvette to Jane in Mary’s Will. In this case, after Mary’s death, Jane will have to wait for the Probate Court to issue a document that would transfer title to the car to Jane.
Remember that a beneficiary has no rights until after your death. You can always change a beneficiary later.
Naming a beneficiary almost always makes transferring assets less complicated. However, beneficiary designations are not ideal in every situation, so it is important to consult an attorney about your plans. Please contact attorney Chris Greene to discuss the best solution to transfer assets to the next generation.