At some point in time, your property will be transferred to someone else's control or ownership. This can happen in several ways, some by your choosing, others automatically by law. Included are changes in property rights due to your death. Probate is the legal process for winding up a person's affairs after death, but it might not be the best means to deal with your property. There are other ways to change property ownership and rights than via probate.

Why Not Probate?

There are several reasons why you might not want rights to your property changed through the probate process. These include time, cost and privacy. For example, you'll face probate costs and attorney's fees, which can vary depending on the size of your estate. Court records are also public; your will is recorded as part of the probate process, and others may choose to view it. Alternate methods for transferring property may just make sense for your situation.

Do know while using other means to transfer property may allow a bypass of many probate procedures, other issues affecting your property and estate remain. There may not be a change in your estate's federal or state death taxes, for example.

Options for Transferring Your Property

Joint Tenants

You've probably used one of the most common types of changing title to property: joint tenancy. Joint tenancy means two or more owners or tenants have equal and undivided ownership rights to property. Owning real estate or a bank account as joint tenants are good examples.

What does joint tenancy mean? The joint tenants equally own and have rights to the whole of the property. Think of a joint bank account you share with your spouse; either of you are free to access the funds at any time. You may notice on your financial accounts that you and your spouse or another person hold title as joint tenants with rights of survivorship (JTROS). This means that at the death of one owner, his share immediately transfers to the other joint tenant.

Tenants in Common

Tenants in common, or tenancy in common, is another way two or more owners can share ownership. Here, the ownership shares don't have to be equal, and each tenant in common is free to dispose of his share, for example, by selling it or leaving it to someone in his will. Married couples usually don't opt for this form of shared ownership. Siblings or other relatives often hold title as tenants in common.

Tenants in common may have different rights to the property, and there can be issues when there are disagreements. The result can be a partition action, which is a lawsuit in which an item of property, or proceeds from its sale, are divided.

Gifts

Another way to transfer property is via a gift. Once the gift is complete, you don't own the property and it isn't subject to the probate process. If the donee or recipient of the gift is a child, the Uniform Transfers to Minors Act (UTMA) provides some security for the gifted property until the child reaches age 18 or 21. States adopt a version of this uniform law, and the idea is that an account or asset title is held by a custodian, such as the child's parent, until adulthood.

Insurance Benefits

You may own an insurance policy, and you may be the insured person, as in a life insurance policy, but the benefit is paid to the person you name as beneficiary. The death benefit isn't property of your estate, and doesn't go through probate. Note in some cases, estate taxes may still be an issue.

Retirement Accounts and Payable on Death Accounts (POD)

You can designate a beneficiary for your retirement plan and Individual Retirement Accounts (IRAs), and the assets or rights in these accounts do not pass through probate.

Payable on Death or "POD" accounts are a very simple form of a revocable trust you can use to transfer bank accounts at your death. These accounts are also called "Totten Trusts" or "in-trust-for" accounts. Your account signature card directs who owns the account upon your death. This account type is attractive because it's easy to set up, account assets don't go through probate and there's added Federal Deposit Insurance Corporation (FDIC) protection for such accounts compared to regular bank accounts.

Options and Planning

There are many aspects to managing your property during your life, and from an estate planning perspective. Talk to your attorney about your options for transferring your property and select the best method for you.

Questions for Your Attorney

  • Are there certain assets I should place in joint tenancy or with immediate transfers at my death so my loved ones have access to needed funds when I die?
  • How long does it take for probate to be completed?
  • Will the way I transfer property impact estate or gift tax issues in my case?