Plan For The Future With Confidence

Plan For The Future With Confidence

Are transfer on death options a way to escape probate?

On Behalf of | Aug 27, 2021 | Estate planning

Probate could take more time than heirs expected, leaving many waiting for funds that could cover significant life expenses. Estate planners may worry about how much time, cost, and stress might burden beneficiaries, so they could explore transfer on death (TOD) options to avoid probate. While this strategy might not keep beneficiaries out of a Maryland probate court entirely, several accounts could switch to heirs without the court’s involvement.

Transfer on death beneficiary designations

Financial accounts often provide an option to name a beneficiary. When listing a beneficiary, the account holder establishes a new owner upon his or her passing. Under the transfer on death rules, the named beneficiary receives the account when the primary account holder dies.

The process has nothing to do with probate nor requires any executor involvement. Probate transfers involve using a will or Maryland’s intestate laws to determine who receives solely owned assets. So, if a checking or brokerage account had no joint holder or named beneficiary, the account would require probate.

Beneficiaries would provide the financial institution with a death certificate and, likely, fill out any required forms. The beneficiaries need not provide any information to the court, as TOD accounts are outside probate’s rules.

Planning transfer on death accounts

Persons involved in their estate planning process might need to consider some things. Do the beneficiaries know they appear on specific accounts? Making sure they learn about their designations could be an essential part of the estate planning process.

Estate planners may need to review all their financial accounts to ensure the proper beneficiaries appear on the form. Usually, a person’s name and date of birth might be enough. A periodic review of named beneficiaries could be a good idea as well. Times change, and so might relationships.