Valuable assets require careful consideration during estate planning. People often take special steps to address businesses or real property that they own. They may want to keep their most valuable assets out of probate court.
Typically, any resources that belong directly to an individual pass through probate court as part of their estate when they die. However, individuals who establish robust estate plans before their passing can keep certain resources out of probate court or eliminate the need for probate oversight entirely. Retirement savings could be a top priority as people think about their security in their golden years and the legacy they leave after they die.
How can people keep retirement savings out of probate court?
People can transfer accounts to specific recipients
Property that remains in the name of an individual who has died generally requires probate oversight as part of that person’s estate. There are different strategies that testators can use to keep their most valuable assets out of probate court. Doing so can reduce the likelihood of estate taxes and prevent creditors from trying to intercept assets as part of their probate-based collection efforts.
One of the options for keeping retirement savings out of probate court is to transfer the ownership of those resources to a trust. Some people do not want to establish a trust because they don’t want to lose control over their resources or invest the time necessary to structure and fund a trust. Thankfully, financial resources are eligible for an alternative solution.
People who hold their retirement savings in financial accounts can establish transfer-on-death designations for those accounts. They can submit paperwork to the financial institution that names a specific beneficiary.
After the current account holder dies, the beneficiary they named in their transfer-on-death paperwork can assume control of the account. They generally need a copy of the death certificate and state-issued identification to become the new owner of the account when the prior owner dies. Transfer-on-death designations are an efficient and accessible solution for valuable financial accounts.
Identifying resources that could be vulnerable during estate administration can help people create the best possible estate plans. Arranging for the direct transfer of retirement resources can be a viable option in many cases.