You may be able to transfer many or all of the assets in an estate without going through a formal probate proceeding. This will make the process shorter and simpler, leaving you with fewer pitfalls to avoid. The types of property that will not need to go through probate include assets for which the decedent named a beneficiary in a document other than a will. Also, assets that the decedent owned jointly with someone else may not go through probate if the type of ownership provides for the co-owner to automatically take over the decedent’s share.
Many aging individuals put their property in a living trust so that they can transfer it to beneficiaries without going through probate. The successor trustee to the decedent will transfer the assets to the beneficiaries. This does not involve the executor unless they are also the successor trustee.
Property Held in Joint Tenancy or Tenancy by the Entirety
A surviving co-owner of any property held in joint tenancy will be able to take the decedent’s share of the property without putting the property through probate. They still need to fill out legal documents to establish their ownership of the asset, but this reduces the burden on the executor. In the event that the property was held in a community property state, a different procedure may apply for transferring the property to the surviving spouse, which may be even simpler.
Many states allow married couples or people in registered civil unions or domestic partnerships to own assets in tenancy by the entirety. This can be transferred similarly to property owned in joint tenancy, using a sworn statement by the surviving spouse.
Any property owned by the decedent with a surviving spouse as community property with right of survivorship goes to the surviving spouse by law. However, this option is not available in most states. Other community property states allow a spouse to designate all of their property as community property under a community property agreement. Even if there is no community property agreement, and the property is not explicitly held as community property with right of survivorship, the surviving spouse still may be able to gain access to it without probate.
Less than half of the states allow a car owner to register the vehicle on a transfer-on-death form. You can check the car’s registration to see if there is a TOD beneficiary. Otherwise, you can contact the motor vehicle agency in the decedent’s state to see if there may be another efficient alternative to probate to transfer the vehicle. Some states offer streamlined ways to transfer a vehicle to a surviving spouse or to transfer a vehicle that has little value.
Income and Securities
A surviving spouse usually can receive any remaining income or wages that had not yet been paid to the decedent. Otherwise, the decedent’s children can receive this money. If the decedent registered stocks, bonds, or mutual funds on a transfer-on-death form, those can pass to the beneficiary automatically. If the decedent co-owned savings bonds with someone else, the other owner can receive them without probate. Or, if they named a payable-on-death beneficiary, that person can receive the bonds.
A beneficiary of a payable-on-death bank account should be able to claim the money in the account without going through probate. They probably will not even need the assistance of the executor. A Totten trust or revocable trust account will follow the same process as a payable-on-death account and will not involve the executor directly.
Life Insurance, Retirement and Health Savings Accounts, and Pension Plans
Unless the decedent named their own estate as the beneficiary of a life insurance policy, its proceeds will go to the beneficiary named on the policy without the need for probate. There is an exception if all of the primary and alternate beneficiaries on the policy have died, but this is uncommon.
Similarly, beneficiaries of traditional and Roth IRAs, 401(k)s, and other retirement accounts can receive funds from those accounts directly, unless the decedent named their estate as the beneficiary. A health savings account attached to an employee’s health plan may contain funds that were invested before the employee’s death. These funds can go to beneficiaries directly. Pension plan distributions are another example of an asset that usually has a named beneficiary and can avoid probate.
Special Issues Involving the Transfer of Real Estate
Under state law, a decedent’s primary residence may be classified as their “homestead.” This may mean that it is automatically transferred to their surviving spouse or children without probate, even if a will provides otherwise. Homestead property also may be protected from creditors.
About half of the states permit a property owner to transfer real estate in a transfer-on-death deed. The decedent must have recorded this deed before their death in the county where the property is located. The beneficiary can take title to the property without assistance from the executor.