As far as probate goes, Virginia is not a bad place to die. Virginia probate is relatively inexpensive and simple. However, probate requires publication of the will (and, therefore, a lack of privacy), and it can cause significant delays in getting assets to your beneficiaries. Read more to learn about my top four ways to avoid probate.
For starters, if you want to learn more about probate in Virginia, please see my probate blog here. If you understand probate and know you want to avoid it, below are some ways to do so.
Now, as you read this blog, keep in mind this basic rule: the only assets that must be probated are those assets owned solely by you when you die – that is, assets titled in your name alone. So, you may avoid having to probate an asset if someone else has an ownership interest in that asset at your death. Well, how do you do that?
Beneficiary Designations. For assets like life insurance and retirement accounts, you may often fill out a simple form with the applicable company holding the asset that states whom you’d like to receive the proceeds when you die. Simply call the customer service number and explain you’d like to review and possibly change your beneficiary designation. Many companies offer lots of flexibility in doing this. You can name primary and contingent beneficiaries, and can usually establish different percentages for different people if you’d like.
Transfer on Death (“TOD”) or Pay on Death (“POD”). Similar to making a beneficiary designation on insurance and retirement accounts, you can set up bank accounts to be transferred to another person at death (“TOD”). Likewise, you can set up brokerage accounts to be paid in the same manner (“POD”). In my experience, the terms “TOD” and “POD” are often used interchangeably. So, when you die, this type of asset is paid to your chosen person automatically without need for probate.
Joint Ownership. If you own an asset “jointly” with another person, that asset becomes the property of your joint owner at your death without having to go through probate. We usually see joint ownership on real estate deeds and checking accounts, usually, but not always, between married couples.
Living Revocable Trusts. To learn more about living revocable trusts, read my blog here. Basically, you create the living revocable trust during your lifetime, naming a trustee to manage the trust and selecting your beneficiaries who will receive the trust assets at your death. Once you transfer (or re-title) an asset in the name of your trust, you no longer legally own the asset – your trustee does. Remember, the only assets that get probated are assets you owned alone at death. Your living trust effectively removed assets from your probate estate, and your trustee can distribute those assets without having to go through the probate process.
Using these techniques can help you avoid probate and provide for a quick and effective method of transferring assets at death. Keep in mind, however, that probate avoidance should be part of your overall estate plan. There are potential pitfalls to this type of planning if you’re not careful. Call us today at 804-658-3873 or email us at firstname.lastname@example.org and let us help you get your planning in order. Thanks for reading!