You have made decisions that will help you avoid probate without realizing it. These decisions are often made without consulting an attorney or an estate planner. If you decide to use the services of an attorney and/or estate planner make sure that you have discussed these was of distributing property outside of your estate with them.
- Life insurance – a term life insurance policy that is equal to the amount of your salary or more if you have the option of increasing it, is a common benefit employers give their employees. You are required to designate a beneficiary of this policy at the time of your employment. The proceeds of this policy do not pass through your estate unless you designate your estate as the beneficiary.
- Joint Tenancies – real property that is held in joint tenancy with right of survivorship does not pass through the probate estate. The property becomes the sole property of the other tenant at the moment of your death. This also applies to stocks and bonds that are held jointly in this fashion.
- Bank accounts – held jointly with another person become the property of the remaining owner at your death without passing through probate. It is a common practice for some elderly people who have saved money for their burial expenses to place another family members name on the account to give easy access for paying burial expenses at their death. This can be a double-edged sword if the person you trusted to use the money for your final expenses choose to use it for their own purposes instead.
- Retirement plans payable to named beneficiaries do not pass through a probate estate. This includes pensions and IRA’s.
- Property held in a trust
Do not take the fact that you may have some of these methods of avoid probate to mean that you do not need to consider estate planning. These items may not have immediate probate and tax consequences for you but they could have an effect on the beneficiary who in most cases is a spouse or children. Proper planning by you now can avoid this.
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