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DeSantis Law Group, INC

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Typically, the best way to avoid probate is to use a revocable living trust to transfer assets at death. Living trusts often make things much easier on the surviving family members because they frequently:

  • Cost less to administer than probate
  • Streamline the process for transferring assets
  • Provide far more privacy than probate
  • Create organization
  • Reduce the risk of getting a court involved in your estate

Other Alternatives to Probate

Certain accounts like joint tenancy, transfer-on-death (“TOD”) or payable-on-death (“POD”) accounts can also be used to transfer assets at death. However, there are risks in relying on these mechanisms to transfer property.

Joint Tenancy & Its Risks – Joint tenancy is designed to work like this: if two people are joint tenants on an account and one dies, the survivor inherits whatever is in the account. This can work ok, but often what happens is that after the first joint tenant dies, the surviving joint tenant never updates the account to add a new joint tenant and never changes the account to a pay-on-death or transfer-on-death account (which would enable the surviving tenant to name a designated beneficiary). Consequently, when the surviving joint tenant dies and there is no designated beneficiary or joint tenant to inherit the contents of the account, this can create a situation in which the probate process may be needed to determine who should inherit the asset. There may also be difficulties with creditors; if one joint tenant defaults on a loan the creditor may satisfy the debt by taking money from the joint account (even when the other joint tenant is not a borrower).

TOD or POD Accounts & Their Risks – These are accounts designed to enable the accountholder to identify a beneficiary for the account. A big problem with these accounts is that many times there is no beneficiary listed on the account. Another problem that can arise is when the designated beneficiary dies before the accountholder. If there is no ascertainable, living beneficiary on the account, that could create a probate problem.

Other problems with joint tenancy, TOD, and POD accounts

(1) There are no control mechanisms in these accounts to protect younger beneficiaries from themselves. One of the most valuable aspects of using a living trust is that the trust creator can include restrictions on gifts to prevent beneficiaries from wasting their inheritances. For example, a common restriction we put into trusts is an age requirement – beneficiaries must be at least 30 years old (for example) before they are allowed to receive their inheritance outright. If a beneficiary is under 30 years of age, then that beneficiary’s gift will remain in trust until the beneficiary turns 30. In the meantime, the gift will stay in the trust where it is to be protected and the beneficiary will only be allowed to receive distributions for a good reason (like to pay for schooling, rent, food, gas, medical expenses, etc.). These kinds of control mechanisms are not available when the deceased person uses joint tenancy accounts, POD accounts, or TOD accounts.

(2) There is no mechanism inherent in joint tenancy, POD, or TOD accounts to allow for another person to manage these assets on the accountholder’s behalf in the event the accountholder gets sick or hurt and cannot manage his or her assets. If the accountholder puts these assets into a living trust, the terms of the trust will authorize a successor decision-maker to manage these accounts for the accountholder any time the accountholder is unable to manage his or her assets.

For more information about Ways To Avoid Probate In California, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (707) 900-4500 today.

The ideas discussed in this article are for general informational purposes only and should not be construed as legal advice. The reader should consult with an attorney to determine what is in the reader’s own best interest.

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