The probate process can be expensive and time-consuming, and it can sometimes create hostility between family members. For many of your largest assets, like real estate, vehicles, or financial accounts, you can avoid the probate process by creating a transfer on death designation. A transfer on death designation allows a named beneficiary to receive an asset, automatically and immediately, at the time of the grantor’s death, thus avoiding the probate process. For example, if you own a transfer on death savings account with your child as its named beneficiary, then upon your death he or she will immediately take possession of the account and the funds it contains. Naming your child as a beneficiary, however, does not give him or her access to that account during your life.
Transfer on death deeds require the filing of a new deed which includes a transfer on death designation and a named beneficiary. Transfer on death titles, on the other hand, can provide for the transfer of ownership of cars, boats, or RVs. This requires filing a new title with the BMV to include a named beneficiary. Finally, transfer on death accounts allow the owner to name a beneficiary for a bank account, individual retirement account, 401(k), or other similar account. Although this process can differ depending on which financial institution holds the account, multiple beneficiaries can usually be designated, and grantors can specify how much should be distributed to each beneficiary.
While transfer on death designations function by operation of law, the named beneficiary’s rights may still be limited in some cases. For example, if your ownership interest in an asset in encumbered, such as by a mortgage, then the asset will pass to the beneficiary subject to that mortgage. In other words, a transfer on death designation generally does not circumvent creditors of the deceased person.
By using transfer on death designations, your property can be passed immediately without going through the costly and lengthy process of probate. To make sure your estate is in order, please contact McNeelyLaw LLP at 317-825-5110.
This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.