An estate plan can create the framework for a meaningful legacy after a person dies. Estate planning can also provide support to the people left behind after a tragedy.
Testators may want to reduce what property becomes part of their estate and passes through probate court. There are estate planning tactics that can help people prevent their financial accounts from passing through probate court.
Financial accounts held solely in the name of one person typically become part of that person’s estate when they die. Planning in advance can help people arrange for their checking accounts, savings accounts, investment funds and retirement accounts to bypass probate court.
What options are available?
There are several tools that can keep financial resources out of probate court. Adding a co-owner immediately can prevent the account from becoming part of an estate. However, co-owners can withdraw funds from the account, possibly endangering resources that the current account holder needs during retirement.
As such, they may prefer to file beneficiary designations with their financial institutions instead. Transfer-on-death documents allow for an outside party to assume ownership of the account after an account holder dies without having access to it while they are still alive.
It is also possible to transfer financial resources to a trust. Doing so immediately can preserve those resources during future legal challenges or when facing collection efforts. Otherwise, it is also potentially possible to arrange for accounts to transfer to a trust after the account holder dies.
Looking at the totality of the prospective estate and the goals of a testator carefully can help identify the best strategy for keeping financial accounts out of probate court. An estate planning attorney can help those with well-funded accounts evaluate different solutions and achieve their estate planning goals.