Understanding Probate and Estate Planning
Updated: Oct 6
Why Should I Avoid Probate?
Any asset held solely in your name, without a named beneficiary or co-owner, is subject to probate when you die, regardless of whether you have a will. A will does not skip this process. It simply instructs the court on how you want things handled.
The court must review your will, confirm its validity, and appoint your Personal Representative, also known as an Executor. This process can be lengthy. Most families need an attorney to navigate it, which can be costly.
Certain assets avoid probate because they pass according to their own rules, rather than through the court. If these rules are not aligned with your overall plan, the outcomes can differ significantly from your intentions.
Common Assets That Avoid Probate
Here are five common examples of assets that can bypass probate:
Jointly Owned Property
If you own real estate, a bank account, or another asset as joint tenants with rights of survivorship, it automatically passes to the surviving owner upon your death. This process does not involve probate, and your will has no authority over it. This differs from owning property as tenants in common, which does go through probate. Families are often surprised to discover the type of ownership they actually have.
Retirement Accounts
401(k)s, IRAs, and similar retirement accounts pass directly to the named beneficiary on the account. I have seen cases where someone's will left everything to their children, but an outdated beneficiary designation still named an ex-spouse. The beneficiary form always takes precedence.
Life Insurance
Life insurance policies pay out to the named beneficiary directly, outside of probate and your will. If you haven't reviewed your beneficiary designations in years, it's worth checking.
Transfer-on-Death and Payable-on-Death Accounts
Bank accounts can be set up as payable-on-death, while investment accounts can be designated as transfer-on-death. This means a beneficiary receives the funds directly upon your passing. These designations completely bypass probate and take effect immediately.
Trust Assets
Any asset properly titled in the name of a trust, rather than your individual name, passes according to the trust's terms, not through probate. This is a primary reason people use trusts: to keep assets out of the probate process. However, to avoid probate, you must change the asset's title to the trust name while you are still alive. If you forget this step, probate will be necessary.
Why This Matters
In some cases, a will is never utilized. However, it is hard to predict, and most people err on the side of caution by having a will. It is crucial to cover anything not otherwise addressed, such as naming a guardian for minor children, an executor, and stating your wishes. If your beneficiary designations, account titling, and trust funding are not coordinated with your will, you may end up with an estate plan that appears complete on paper but does not function as you expect.
At Senior Solutions, we believe that Planning + People = Peace of Mind®. Part of doing this work correctly involves reviewing everything and focusing on the entire picture.
Our Commitment to You
Senior Solutions, Attorneys at Law, is an Estate Planning and Elder Law firm serving the Greater Boston, Massachusetts area since 2001. We are ready to assist you with Medicaid Planning, Estate Planning, Probate, Guardianship & Conservatorships, Special Needs Trusts, and Fiduciary Services. We are here to help.
Please call our office at 617-489-5900 or schedule an initial consultation.
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