When you get into the subject of estate planning, you will hear about probate avoidance. Those who use a last will to arrange for future asset transfers are setting the stage for a future probate proceeding. The heirs to the estate won’t receive their inheritances until the estate has been probated and closed.
There are various different drawbacks that go along with the probate process. In general, it is time-consuming, it can be expensive, and it is a public proceeding that strips your family of privacy.
For these reasons, people will sometimes look for ways to avoid probate. In San Jose California, one way that you could avoid probate would be to open a transfer on death account.
TOD or POD Accounts in San Jose California
Transfer on death (TOD) or payable on death (POD) accounts can be opened at banks and brokerages. You name a beneficiary when you open the account. After you die, the beneficiary assumes ownership of the funds that remain in the account. This transfer of ownership takes place outside of probate.
When you open a transfer on death account in San Jose California, the beneficiary does not have access to the resources that have been placed into the account until you do in fact pass away. This is a positive on the one hand, because you are retaining full control.
On the other hand, the beneficiary would not have access to the funds in the event of your incapacitation. This is one of the problems with transfer on death accounts.
Revocable Living Trusts
If you were to eschew a transfer on death account in favor of a revocable living trust, you could name a disability trustee. Your disability trustee would be empowered to handle the assets that have been placed into the trust in the event of your incapacitation.
You get the best of all worlds with a revocable living trust. You don’t surrender control of the assets because you can act as the trustee and the beneficiary at first . You name successors to assume these roles after you die.
The trustee distributes monetary resources to the beneficiaries in accordance with your wishes as stated in the trust agreement. Probate is avoided, because assets conveyed into the trust are not considered to be probate property.
Avoiding Probate
There is no reason to blindly accept limitations when you are planning your estate. You don’t want to build your estate plan around something like a payable on death account if it does not suit all of your needs.
The wise course of action is to make a truly informed decision. Arranging for the transfer of everything that you have earned throughout your life to those that you love the most is a rather heady endeavor. You should certainly consult with a licensed San Jose California estate planning attorney before you make any final decisions.
- The SECURE Act – the Gift That Keeps On Giving - September 28, 2023
- The Importance of Hiring a Probate Attorney (VIDEO) - September 27, 2023
- IRS Confirms Grantor Trust Status Alone Does Not Cause a Step-Up in Basis - September 14, 2023
