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Non-Probate Assets: Quick Money For Your Loved Ones

Strategies focused on avoiding probate in Oregon often focus on trusts. Companies that specialize in trusts make a profit off of people who often do not need a trust in the first place.

Those seeking to avoid probate often do so because their families need payments quickly from their estates. Even though a well-written will keeps probate short and sweet, sometimes a six-month wait is often too much for some people. That is what makes a living trust so appealing.

Rather than invest in the expense and formalities of a trust, look into non-probate assets. Also called payable-on-death (POD) or transfer-on-death (TOD) accounts, these options allow your loved ones to receive money quickly. Here are three options if your family members need money or property quickly after you die.

Joint Ownership

Adding another name to your bank accounts or real estate deeds allows for instant transfer without the process of probate. If you know your home or banking assets should pass to a particular individual, add them as a joint owner with rights of survivorship. This allows instant transfer of those assets when you die and gives your beneficiary access to funds or shelter.

There is one disadvantage to this approach. If your estate is being chased by aggressive creditors, they may garnish your bank account or file a lien against your real estate. This can diminish the value of your assets and place a competing interest against your beneficiary.  If your beneficiary has creditors, they can take your assets to pay off that debt.  Speaking with an estate planning attorney can help you assess this possibility and decide whether your situation warrants the protection of a trust.

Life Insurance

Unless you designate your estate as the beneficiary on a life insurance policy, the proceeds will not go through probate. They pass to the beneficiary or beneficiaries you choose when you start the policy.  

When you designate a beneficiary or beneficiaries on your life insurance policy, inform them of that fact. Also, provide them the name of the company, policy number, and contact information so they can collect on the proceeds as soon as possible.

Also, if it has been a while since you reviewed your life insurance beneficiaries, do so now–especially if your family recently expanded, or you finalized a divorce, or you recently married. People often forget to check beneficiaries after a major life event and loved ones are often shocked to discover a life insurance policy still lists deceased persons or formers spouses as beneficiaries. This leads to considerable delay and heartache, so check your life insurance at least once a year to be sure that your beneficiary list still reflects your wishes.

Retirement Accounts

Saving for retirement assures your comfort after you stop working, but it also assures your loved ones are provided for in case anything happens to you. IRAs, 401Ks, and annuities all give you the opportunity to add beneficiaries. If you are not certain whether or not you designated beneficiaries on these accounts, take time to check. Otherwise, these assets must go through probate.

Just as with life insurance, check beneficiaries on these accounts after each major event. Marriage, death, divorce, and new children or grandchildren may change your priorities for estate planning. That affects your non-probate assets too so pay attention so your plans always reflect your current wishes.

Estate planning is not just about preparation for probate. It is about informed decision-making. Estates plans are as unique as the clients who request them and it is important that you meet with an attorney to create a customized approach that considers non-probate assets, family members’ special needs, and probate concerns. There are situations where relying on non-probate assets is not the best strategy and that can be discussed in detail at your estate planning consultation.

Diane L. Gruber, Attorney at Law, practices family and estate planning law in West Linn, OR. We serve clients Washington, Multnomah, Clackamas, and Marion Counties. Contact our office today to schedule an estate planning consultation.