David A. Yergey III (“D3”)
Avoid Probate with Smart Estate Planning
Due to the inconvenience and expense of having property go into probate, it is understandable that one would desire to avoid it. The primary method which is also the most effective in avoiding probate is to create a revocable trust. However, there are other, less known ways as well.
Joint ownership is one of these ways. This is a common method in Florida, though sometimes it can lead to more problems than just probate. When a joint tenant with right of survivorship is established, then the deed will pass to the survivor depending on whichever tenant passes away first. The problems mostly arise when one adds someone other than a spouse to the title, such as a child. This may result in having to establish a Guardianship.
Transfer on Death (TOD) is a method of ensuring securities registration that allows one to name a single, or numerous beneficiaries of whom the securities account would pass to at the time of one’s death. The brokerage firm or other entity that accepts the registration delivers the securities according to one’s directions. Since any assets passing to a beneficiary as a result of this arrangement by a TOD registration, it remains outside of the probate estate and therefore avoids probate altogether. The assets are not controlled by ones Last Will and Testament. The main advantage of this arrangement is that it allows one to maintain complete control of assets throughout one’s life. However, disadvantages exist as well. Since a TOD only covers the registered assets, everything outside of the arrangement must be dealt with in another fashion. Additionally, if the designated beneficiary is a minor or suffers from a debilitation that will not allow them to manage financial affairs, the account still goes directly to them and the property cannot be managed for them by anyone else.
“In Trust For” is a very similar method to a TOD insofar as one can name an individual or multiple individuals to receive one’s accounts after their passing thus avoiding probate, though it is primarily used for checking accounts, savings accounts, and certificates of deposit. As it is very similar, the same advantages and disadvantages remain as with a TOD arrangement.
Lastly, some choose Annuities, Individual Retirement Accounts (IRAs), life insurance policies, pension plans, and other retirement plans can be utilized to avoid probate. The retainer of the accounts may name a beneficiary or beneficiaries to receive the accounts at the time of one’s passing. The proceeds would then be paid by contract, thus avoiding probate as well. It is important that you review the contract and understand how the benefits are paid.
Questions about your estate plan? Contact Yergey and Yergey P.A. to schedule a consultation and discuss your estate plan!