A well-conceived estate plan can achieve a number of objectives, not the least of which is avoiding probate. For those who have estates with significant assets, a probate proceeding can be lengthy and expensive. Moreover, probate is a court proceeding, which means that the financial details of an estate plan are available for public scrutiny. The best way to ensure that your assets will be passed seamlessly to the intended beneficiaries is to consult a trustworthy estate planning attorney.
E.A. Goodman Law, LLC provides comprehensive estate planning services to individuals, couples and families in the Morristown area and throughout the state of New Jersey. Well-versed in the applicable trusts and estate laws, we routinely work with clients to establish wills and trusts and also provide advice and guidance on how to avoid probate. When you become our client, you will have confidence knowing that your legacy will be preserved and your loved ones will be protected.
Avoiding Probate 101
In short, avoiding probate is a matter of transferring assets outside of your Will, and there are a number of legal mechanisms to do so, including:
- Revocable Living Trusts
- Joint Property Ownership
- Designating Death Beneficiaries
Revocable Living Trusts
A trust-based estate plan is an effective means of avoiding probate. By creating a revocable living trust, for example, you can continue managing the trust assets while your are living, plan for incapacity, and provide instructions for the distribution of your assets without going through a probate proceeding. Property that is transferred into a revocable living trust is actually owned by the trust, which means that probate is not necessary.
It is critically important to make sure that all property is transferred into the trust, which is commonly referred to as funding the trust. Any property that is not properly transferred must be probated. By creating another important document known as a “pour-over will,” you can name your trust as the beneficiary of any property it does not hold. Finally, while a trust-based estate plan can help to avoid probate upon your death, all trusts must go through a trust administration phase to honor and carry out the terms of the trust.
Joint Property Ownership
Property that is owned jointly with another party, and that includes “the right of survivorship,” automatically passes to the surviving owner when the other owner dies, thereby avoiding probate. Two forms of joint ownership in New Jersey include:
- Joint tenancy — Property owned by joint tenants in New Jersey automatically passes to the surviving owner when one owner dies, provided that each joint tenant owns an equal share
- Tenancy by the entirety — A form of joint ownership available only to married couples in which, upon the death of one spouse, the surviving “tenant” takes ownership of the deceased spouse’s share
Designating Death Beneficiaries
In New Jersey, certain types of financial assets and property, with the exception of real property and automobiles, allow you to designate a beneficiary upon your death. Since the assets become the property of the beneficiary, probate is not necessary.
- Payable on Death Accounts — A “payable on death” (POD) designation can be added to bank accounts such as savings accounts, checking accounts and certificates of deposit. This allows the named beneficiary to claim the accounts directly from the bank upon your death, and avoid probate.
- Transfer-on-Death Securities Registration – Stocks, bonds, and other investment accounts are typically held in transfer-on-death (TOD) form. The accounts are transferred to the named beneficiary outside of probate. To have the accounts transferred, the beneficiary must provide the brokerage firm with a death certificate.
- Retirement Accounts — Individual Retirement Accounts (IRA) and 401(k) plans require you to name a beneficiary of the account upon your death. Single individuals can select anyone, however, a spouse must be the designated beneficiary of a married person’s 401(k). A spouse may also be entitled to a portion or all of the proceeds in an IRA. In any event, these types of retirement accounts pass to the designated beneficiaries and avoid probate.
How an Estate Planning Attorney Can Help You Avoid Probate
When you consult E.A. Goodman Law, we will take the time to understand your financial circumstances and explore all of your options for avoiding probate. We will work closely with you to make sure that your property is correctly titled and that the proper beneficiary designations are in place. In addition, we can draw up a living trust, assist with transferring property into the trust, and prepare a pour-over so that any assets you acquire after the trust is created to avoid probate.
Through the years, clients have come to us with concerns about protecting their assets and providing for their loved ones. We work to address those concerns by providing first-rate legal representation and caring personal service. Please contact our office today to learn how we can help you avoid probate.