A nonprobate transfer is a way of transferring property without having to go through the probate process. This type of transfer is usually done when the property owner dies, but it can also be done while they are still alive. Nonprobate transfers are often used to avoid the lengthy probate process, which can take months or even years to complete. The most common types of nonprobate transfers include: trusts, living wills, payable-on-death accounts, and joint ownership.
Trusts
A trust is a legal relationship between the trust creator and the beneficiary. The creator of the trust is the grantor, who names the trustee to handle the trust assets. Assets are transferred to the trust during the grantor’s lifetime or upon their death. The trustee is in charge of managing and investing the trust assets, and the beneficiary is entitled to the income, or a portion of the trust assets upon the trust founder’s death. The trust assets are not subject to the probate process.
Living Wills
When a person completes a living will, they are expressing their wishes for their medical care if they are ever unable to express it. In many cases, a living will can include instructions on how the person’s property should be distributed after their death. This helps to avoid the probate process, as the contents of a living will can be considered binding.
Payable-on-Death Accounts
Payable-on-death accounts are bank or brokerage accounts that are opened in the name of the account owner, and they can name a beneficiary who has the right to the funds in the account upon the owner’s death. Payable-on-death accounts are not subject to probate as the beneficiary has the right to the funds in the account without the need of probate court approval.
Joint Ownership
Joint ownership is a way for two or more people to own a single piece of property, such as a house. When one of the owners dies, the survivor has the right to the property without having to go through the probate process. This is because the right to the property automatically passes to the survivor without the need of court approval.
Nonprobate transfers are an efficient and cost-effective way of transferring property from one person to another. These types of transfers can help to avoid the lengthy probate process, which can take months or even years to complete. It is important to seek the advice of a qualified estate planning attorney to determine which type of nonprobate transfer is right for your situation.