There are several roads to every destination. Some are easier to travel than others and some are hard. When the owner of a property passes away, there are 5 ways their property can be transferred to the a family member.
Trust Administration
Trust administration is the process of ‘administering’ a trust that was created during the lifetime of the person. The trust owns the assets not the individual who passed away. So at death, the Trust needs to be read and the wishes of the person who passed away must be executed.
A trust can transfer almost any asset in a legal efficient way. Assets in a trust usually include financial accounts, such as bank accounts and stock accounts, or real estate.
For example, John dies leaving a trust. In the trust, he expressed his wishes that his home be distributed to his daughter, Sally. At his death, the attorney will administer the trust and transfer the ownership of the property to Sally without court orders or a judge’s supervision.
Probate Administration
Probate is a court-process that takes place in California when someone dies having no documents in place or having done a Will. This usually occurs when an individual passes away with assets in his or her name that need to be transferred to the heir or beneficiary. During this process, the court oversees the transactions to verify its legitimacy before the new owners, beneficiaries, or heirs take possession of the asset. The type of asset being transferred will determine whether it goes through probate or not.
For example, John dies leaving a Will. In the Will, he expressed his wishes that his home be distributed to his daughter, Sally. At his death, the attorney will open a probate case with the court and after a year or so of court procedures, the property will be distributed to Sally at the end.
This process differs from the trust administration in that it takes much longer (years), is public information (not private like the trust administration), and very costly (4 to 5 times the cost of an administration at minimum).
Beneficiary Designation
A beneficiary designation is a method of transferring an asset at death using a beneficiary designation form. When you have an asset, such as a bank account or a savings account, you will typically find a beneficiary designation form or a beneficiary designation clause with the institution that the account is with. Not all accounts have beneficiary designation, and not all institutions offer this option.
It depends on the financial institution; some will allow it, while others will not. So, it all comes down to the contract and the type of account you have with the financial institution. A great example of beneficiary designation is in life insurance. An individual can specify who they want to be the beneficiary at their death. So, when they die, it doesn’t go through probate or a law office; instead, the life insurance company will follow the instructions on that beneficiary designation.
For example, John dies. He had a life insurance policy. He did not sign a Will or Trust. At his death, Sally submits a death certificate to the life insurance company and they life insurance company informs her that she is listed as the beneficiary on the policy. They send her a check for the amount.
Sally does not go to the probate court or through an administration process for this policy.
Survivorship Clause
Survivorship Clauses are mainly used when an asset is owned in joint tenancy. It allows for assets that were jointly owned to be easily transferred after death without a court proceeding. With a survivorship clause, when an individually who jointly owns an asset dies, the other person(s) who co-own automatically inherits the other part of the asset without having to go to court. When there are more than two people, the survivorship clause automatically allows the last man standing to inherit the asset without going through probate. In order to have this, the survivorship clause must be included in the contract or deed for it to be effective and avoid the probate process.
For example, John dies. He owned a property with Sally, as joint tenants. When he dies, the property automatically goes to Sally with her holding 100% ownership without the court’s involvement.
Transfer on Death Clause
This type of clause is straight forward, as the name states, it is a transfer on death. With this clause, upon an individual’s death, their asset will be transferred to a designated individual. With transferring an individual’s accounts, it depends on if the financial institution will allow you to request a transfer on death clause. You can also create a transfer on death deed, which would apply to real properties instead of accounts. However, option is very limited with lots of restrictions so an attorney should always be consulted.
As you can tell, there are more ways than 1 to transfer assets at death and the process of transferring assets after death can always change depending on the asset or who the servicer is. As a result, your options on what to do can also vary which is why you should discuss with an attorney your best possible course of action before employing any of these methods. We offer free consultations, so feel free to contact our office.
You must be logged in to post a comment.