When you pass away, many of your assets are going to go through probate. But it is important to remember that not all of them are bound by this process. There are some assets that can skip probate entirely, often by transferring out of your possession upon your passing.
One example of this is a payable on death account. This is also known as a Totten trust.
When you set up this type of account, it still operates similarly to a traditional financial or banking account. You are the only one who has access to it, but you can name a beneficiary who should become the account holder upon your passing. Because it is set up this way, it automatically transfers into their name, and they can often access those funds before probate has been completed.
A life insurance policy
A life insurance policy is similar. You buy the policy while you are alive, so you think of it as an asset that you own. But when you pass away, the life insurance provider makes the payout to your selected beneficiary.
In some cases, an estate plan may actually be in conflict with the beneficiary designation on a life insurance policy. At that time, it is important to note that the designation usually takes precedence. The insurance company is going to pay the beneficiary that they were instructed to pay, regardless of what you wrote in your will.
Comprehensive estate planning
Making an estate plan is important, and it is crucial to think about all of the assets you own and how they may or may not be impacted. Be sure you know what legal steps to take to make a plan that works for your family.
