What are true Alternatives to Probate?


We are often asked if there is a way to avoid probate, or if a client really needs a trust. The approach we tend to use is to determine what the client actually wants to accomplish and then recommend solutions that reach their specific goals with a minimum of expense and hassle.

In many cases our client may have an estate that is composed only of bank, credit union, mutual fund, and brokerage accounts. In this situation we often recommend an ideal solution of a Pay on Death or Transfer on Death designation.

Virtually all financial institutions have a form of non-probate transfer to be used in the event of the death of the account owner. It is variously referred to as ‘Pay on Death’ (banks), ‘Beneficial Designation’ (credit unions), or ‘Transfer on Death’ (mutual funds and brokerages).

Each of these designations functions in the same manner. The owner of the account can list the person(s) to whom they want the proceeds in that particular account distributed upon their death. When death occurs, the designated persons need only to present a death certificate and identification and their share of the account will either be paid to them immediately, or, in some cases, their share will be will be placed (transferred) into their own account at the financial
institution.

This process has many advantages over other methods of passing property upon death:

  1. The client maintains absolute control over the asset until their death. They can change the pay on death designation any time they wish, depending upon what occurs in their beneficiaries lives.
  2. The client’s funds are not subject to the debts or misfortunes of their beneficiary, unlike the effect of making that person a joint owner of the account.
  3. The client can close or change the account without the signature or consent of any other person.
  4. The funds are not subject to any probate or trust administration process, minimizing cost and delay.
  5. The client can adjust between different accounts and different beneficiaries to accomplish mixed goals in their estate distribution.
  6. There is no legal expense or filing fee required.
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Disclaimer: The information contained in pages found at www.broesderlaw.com are publications of Arant & Broesder, LLC for general purposes only and should not be construed as legal advice or legal opinion on any specific facts or circumstances. If you have specific legal questions, you are urged to consult your own lawyer concerning your own situation.