An Essential Guide to Transferring Property Outside Probate

When a person dies, their property must go through the probate process in order to be transferred to their beneficiaries. However, there are some ways to transfer property outside of probate, which can save time and money.

In this article, we will explain what is necessary to execute a property transfer outside of probate, and the benefits of doing so.

 

Pay on death account

One way to transfer property outside of probate is through a pay-on-death account. With a pay-on-death account, the account owner designates a beneficiary who will receive the account funds after the owner’s death.

The beneficiary designation is made with the financial institution holding the account and does not need to be included in the owner’s will. Pay-on-death accounts can be used for bank accounts, investment accounts, and life insurance policies.

For example, Mary has a pay-on-death account at her local bank. She has designated her son, John, as the beneficiary of the account. When Mary dies, John can claim the account funds by presenting the death certificate to the bank. The bank will then transfer the account funds to John without having to go through probate.

Additionally, Mary has a life insurance policy with a pay-on-death designation. When Mary dies, the insurance company will pay the death benefit to John without probate. This is good news for John, as he will not have to wait for the probate process to be completed before receiving the money.

Ladybird deed

A ladybird deed is another way to transfer property outside of probate. A ladybird deed is a revocable transfer of property that allows the original owner to retain possession and use of the property until they die.

The property is then transferred to the designated beneficiary. Ladybird deeds are popular for transferring real estate and can be used in conjunction with a will to avoid probate.

The Ladybird Deed used by estate planners is not the same as a Ladybird Deed used in Texas to avoid probate. Also, a Ladybird Deed does not avoid probate in all states. Consult an attorney to see if a Ladybird Deed is right for you.

For example, Mary owns a house that she would like to transfer to her son, John, upon her death. Mary executes a ladybird deed that names John as the beneficiary.

As long as Mary lives in the house, she can continue to use and enjoy it. When Mary dies, John will automatically become the owner of the house without having to go through probate.

Additionally, Mary has executed a will that leaves her other property to her daughter, Jane. Since the ladybird deed only applies to the house, Jane will still need to go through probate to receive her inheritance. Plus, if Mary sells or gives away the house during her lifetime, the ladybird deed is no longer valid and probate will be necessary to transfer ownership.

Trust

A trust is another way to transfer property outside of probate. A trust is a legal agreement between the trust creator (also called the grantor or settlor) and the trustee.

The trustee is responsible for managing the trust property for the benefit of the designated beneficiaries. A trust can be used to transfer any type of property, including real estate, bank accounts, investment accounts, and life insurance policies.

For example, Mary creates a trust and designates her son, John, as the trustee. Mary transfers her house to the trust. When Mary dies, John can transfer ownership of the house to the beneficiaries without having to go through probate.

A trust can be revocable or irrevocable. A revocable trust can be changed or terminated by the grantor at any time.

An irrevocable trust cannot be changed or terminated by the grantor once it has been created. This means that the grantor gives up all control over the trust property once the trust is created. Keep in mind that even though a trust can avoid probate, it does not necessarily mean that the trust property will be protected from creditors.

For example, Mary has created an irrevocable trust and transferred her house to the trust. When Mary dies, her son, John, will inherit the house without having to go through probate. However, if John is sued and a judgment is entered against him, the creditor may be able to attach a lien to the house.

Joint ownership with right of survivorship

Another way to transfer property outside of probate is to have joint ownership with right of survivorship. This type of ownership is when two or more people own the property together and when one owner dies, the surviving owner(s) automatically becomes the sole owner(s) of the property.

The key here is that the deed or title to the property must explicitly state that the ownership is joint with right of survivorship.

To set up joint ownership with right of survivorship, all you need to do is go to the county recorder’s office and file a new deed. The deed should list the names of the current owners as well as the names of the new owners. You will also need to state that the ownership is joint with right of survivorship.

Once the deed is filed, you will need to change the title of the property. This can be done by going to the county assessor’s office and filling out a change of ownership form.

You will need to list the names of the current owners as well as the names of the new owners. You will also need to state that the ownership is joint with right of survivorship. Plus, you will need to provide a copy of the new deed and the filing fee.

There are a few different ways to transfer property outside of probate. The most common methods are through a will, life insurance policy with pay-on-death designation, ladybird deed, trust, and joint ownership with right of survivorship.

Each method has its own benefits and drawbacks, so it is important to consult an attorney to see which option would be best for you. Keep in mind that not all states have the same laws regarding probate, so it is important to consult an attorney in your state to see what options are available to you.