San Diego Estate Planning Lawyer Blog
Aa you have learned from the recent series of blogs on probate, if you can avoid a probate after your death, your heirs will have an easier time settling your estate.
The best way to avoid probate is to have a revocable living trust into which you transfer all of your assets to yourself as the trustee during your lifetime. Upon your death, the successor trustee you have chosen will have immediate authority to administer your trust without a probate. It is critical however that you in fact transfer your assets into your trust by deed, changing title to accounts, etc. Other advantages of a trust are privacy and that if properly drafted, the trust will also have provisions for someone to manage your assets if you become unable to do that for yourself.
Other ways to hold title to avoid probate are:
1. Property held in joint tenancy with a right of “survivorship”. An example might be a home you own with your spouse with a “right of survivorship.” Sometimes people own their cars in joint tenancy with other people or a bank account in joint tenancy. When a joint tenant dies, the other joint tenant(s) inherit the property without the probate process. Although assets held in joint tenancy avoid probate, holding title in joint tenancy can cause other problems such as the potential loss of a full step-up in basis which can result in capital gains. Another problem which can result when you own something in joint tenancy is that creditors of the other joint tenant may be able to enforce a judgment against the property.
2. Payable on Death Accounts (or POD accounts). This is a type of account where you choose a beneficiary who will receive the account upon your death. These accounts pass to the beneficiary without probate.
3. IRAs and Retirement Accounts. Benefits payable to beneficiaries under these accounts automatically pass to the named beneficiaries and avoid probate.
4. Life Insurance Proceeds. Just as with pension and retirement plans, life insurance proceeds are paid to the named beneficiaries and avoid probate.
For questions about probate, living trusts, transfers to trusts, or any other estate planning area, contact us at Law Office of Scott C. Soady, A Professional Corporation.