You should have a general understanding of the estate administration process when you are engaged in your estate planning efforts. Most people think that they should use a will to facilitate asset transfers, but there are reasons why you may want to go in a different direction.
A will is admitted to probate, which is the legal process of estate administration. The executor that is named in the document would be charged with the administrative tasks, and the court would supervise while the process is underway.
There is a proving of the will when an estate is being probated. The court will determine if the will is valid, and anyone that wants to contest its validity can make an argument before the court.
Another function of the probate process is to give creditors an opportunity to come forward seeking satisfaction, because final debts must be paid before the estate is closed.
All of this will usually take about nine months at minimum, and no inheritances are distributed while the estate is being probated. The time consumption is one negative, and probate expenses consume a noticeable portion of the estate before it is transferred to the heirs.
Most people like to conduct their financial affairs confidentially, but privacy is lost when an estate passes probate. The records are available to anyone that goes through the proper channels, and this information can potentially cause hard feelings among interested parties.
Transfer on Death Accounts
Now that you understand why people try to avoid probate, we can address the subject at hand. A transfer on death account is an account with a beneficiary, and they are alternately referred to as payable on death accounts.
You can open a transfer on death account at a bank, and brokerages offer this option. The beneficiary would simply present a copy of the death certificate, and they would assume ownership of the account after the passing of the original account holder.
The probate court would not be involved when a payable on death account is being transferred to a beneficiary.
There can be multiple beneficiaries, and they can potentially receive different percentages. A payable on death account can also have more than one owner.
In addition to banks and brokerages, a 401(k) account is essentially another type of transfer on death account because you can name a beneficiary. A number of states give you the ability to choose a transfer on death option when you register a vehicle, and Connecticut is one of them.
Revocable Living Trust for Probate Avoidance
A payable on death account will facilitate transfers outside of probate, but a revocable living trust is a more effective alternative. If you have this type of trust, you would act as the trustee while you are alive, and you would name a successor to assume the role after your death.
When the time comes, the trustee would distribute assets to the beneficiaries in accordance with your wishes outside of probate. You do not have to facilitate the distribution of the assets to the beneficiaries in lump sums all at once.
If you want to provide safeguards, you can add a spendthrift provision, and the trust would become irrevocable after your passing. The beneficiaries’ creditors would not be able to reach the principal, and you can instruct the trustee to provide limited incremental distributions.
A significant percentage of elders become unable to handle their affairs at some point in time, and you can account for this if you have a living trust. You can name a disability trustee, and this individual or entity would administer the trust in the event of your incapacity.
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We are conducting seminars on an ongoing basis, and this is the best way to come away with a great deal of useful information in a short period of time. There is no charge to attend the sessions, and they are held at convenient locations throughout our service area.
You can see the dates if you visit our seminar page, and when you identify the session that works for you, follow the instructions to register.
Need Help Now?
If you already know that it is time for you to work with a Glastonbury or Westport, Connecticut estate planning attorney to put a plan in place, we are here to help. You can send us a message to request a consultation appointment, and we can be reached by phone at 860-548-1000.
Mr. Horowitz was awarded his Juris Doctor degree with honors from the University of Connecticut School of Law. While attending law school, Mr. Horowitz received the American Jurisprudence Award in Legal Ethics and the Nathan Burkan Award.
After graduation from law school, Mr. Horowitz continued his legal education at New York University School of Law where he received a Post Doctorate Law Degree in Taxation. He has also recently received a national achievement award.
Mr. Horowitz is admitted to practice before all the state courts in the State of Connecticut and the United States District Court.
Mr. Horowitz was selected for Super Lawyers in 2021.
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