It is not complicated to avoid probate, if you take a few simple steps to ensure that property passes to your heirs having to go through the court process. One very simple way to do this, is to designate beneficiaries to inherit certain accounts you own, automatically, upon your death. POD and TOD accounts are good examples of those types of accounts.
Why avoid probate?
Probate can be a lengthy, complicated legal proceeding. Depending on how complex the assets and property in your estate are, the cost of probate can be very high. Going through the probate process, from beginning to end, can take months or even years to complete. Having a will can shorten that time because the administrator and heirs are identified in the will and the court will not have to make those determinations. Nevertheless, the process is still lengthy, as there are so many transactions that must be completed.
What are POD accounts?
An efficient way to avoid probate is to simply designate a beneficiary to inherit accounts such as your bank account, retirement accounts, securities, vehicles, and real estate automatically, upon your death. POD stands for payable-on-death. All that is required to set up these types of accounts is to complete a simple form that names the individual you want to inherit the funds in the account, when you die. The same can be done with certain retirement accounts.
How do POD accounts work?
Upon your death, your beneficiary can simply go to the bank and provide proof of your death and her identity. She can then collect the funds that remain in the account. Probate is not required for any of these transactions. However, as long as you are living, you maintain complete control of the account. Your beneficiary has no rights to the money until your death.
Transfer-on-Death for Securities
TOD Accounts, or transfer-on-death securities, allow you to name an individual to inherit your securities, such as stocks and bonds, without going through probate. TOD accounts work very similarly to payable-on-death accounts. When you purchase securities, like stocks, you must register your ownership with the stockbroker or the company itself. At that time, you can request a beneficiary form. Like with POD accounts, the beneficiary has no rights to the stock, as long are you are still living.
Other transfer-on-Death properties
California, along with several other states, allow car owners the option of naming a beneficiary, to be included on their certificate of registration, to inherit the vehicle. Until your death, you are free to sell or give away the car, or name someone else as the beneficiary.
In some states, you can prepare a deed during your lifetime, that does not take effect until your death. These transfer-on-death deeds must be prepared, signed, notarized and recorded, like any other deed. The deed must expressly state that it does not take effect until death. However, unlike a regular deed, you can revoke a transfer-on-death deed at any time. California does not currently allow these types of deeds, but many other states do.
If you have questions regarding TOD and POD accounts, or any other estate planning tools, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.