When most people think about estate planning, they immediately think of a will. This document guides the handling of your estate after you pass, but it is not the only tool you can use in estate planning. Certain assets automatically pass to the surviving owner, bypassing your will and the probate process.
Property with rights of survivorship
One of the most common ways assets pass outside of a will is through rights of survivorship. This means that when one owner dies, their share automatically transfers to the surviving owner(s). Examples of property that can have rights of survivorship include:
- Real estate held as joint tenants with right of survivorship
- Joint bank accounts
- Shared investment accounts
- Vehicles with joint ownership
Married couples can also own property as “tenants by the entirety.” Unlike joint tenancy, which can be between any two people, tenancy by the entirety provides rights of survivorship as well as special protections, including protection from creditors of just one spouse.
Transfer-on-death and payable-on-death accounts
In North Carolina, you can use transfer-on-death (TOD) and payable-on-death (POD) designations for financial assets like bank accounts and investments. While you are alive, the person you name as a beneficiary has no control over the assets. However, when you pass away, they become the owner right away without having to go through probate. Note that TOD designations are usually for securities and certain types of real estate, while POD often applies to bank accounts.
Assets in a living trust
When you transfer assets into a living trust, it generally avoids the probate process. This is because you are essentially setting up a separate legal entity. The trust, rather than you personally, holds the title to the assets. This means they can pass directly to your beneficiaries, bypassing the delays and public nature of probate.
However, only assets properly transferred to the trust will avoid probate. It’s crucial that you retitle all relevant assets in the name of the trust. A legal professional can ensure your trust aligns with your estate planning goals and complies with state laws.
Ensure your peace of mind
Create a comprehensive estate plan that reflects your true intentions. An attorney can help you establish documents that protect your interests and those of your loved ones.