Probate is the process that people's families go through after they die to determine how debts are paid and who inherits what. This process can be expensive and often lasts for more than a year. It also delays the inheritance that loved ones receive after someone passes. There are several ways to avoid this process so that you do not own assets at your death. Some ways include:
One way to avoid probate is to own property jointly with someone else. When you die with a right of surviorship, your share passes to the other owner automatically. What is on the deed or account controls and any statement in your will is ignored.
Beneficiary Designation Form
This form is standard with retirement accounts and life insurance proceeds. The person you name on the form inherits the proceeds of the account. You should add contingent beneficiaries in case the person you named pre-deceases you. Do not name your estate as beneficiary or you will not avoid probate in this way. Your will cannot override what the beneficiary designation form says.
Payable on Death Accounts
You can add a POD designation on savings accounts, checking accounts and CD accounts. This instructs the bank to give any balance that you have at the time of your death to the person you name. You control the money during your lifetime. At your death, the beneficiary gets the money left in the account. You may have to request a specific form for this from the bank.
Transfer on Death Accounts
TOD accounts are similar to POD accounts. They are used for brokerage accounts, stocks, and bonds. The beneficiary you name on the account inherits the account at your death.
Beneficiary deeds allow you to leave real estate to the person you name. However, they have no immediate ownership interest. There is no effect until your death. The grantee has no rights until your death. This deed must be recorded with the county court clerk. You can revoke this deed, but you must record the revocation.
A trust provides instructions about how you – the grantor – want your assets to be used. It names a trustee who follows the instructions. It names at least one beneficiary who stands to benefit from the trust. You can use a trust for a variety of assets including real estate, bank account, vehicle, money, etc. The asset’s ownership must be transferred to the trust.
Key words: probate, Arkansas, inheritance, POD, TOD, Legal Aid