How to Avoid Probate on Bank Accounts
If you have a bank account that has not been designated as an asset in the estate’s will, discover if it’s possible to avoid probate on bank accounts here.
What is Probate?
Probate refers to the legal process by which an asset or property is transferred from the deceased’s possession to his beneficiaries or heirs.
Many situations in which a person dies with money in their account require probate to disperse the money to their heirs or other beneficiaries. The reason for this is that under normal circumstances, you would need the deceased’s signature to transfer funds. Without that signature, the probate court steps in to make sure funds are transferred properly.
Probate can be a lengthy process, which is why it is helpful to establish an attorney client relationship with skilled and experienced Las Vegas Probate Lawyers as soon as possible. With some strategic planning from the attorneys at the Wood Law Group, you could potentially avoid probate altogether.
What Are Some Reasons to Avoid Bank Account Probate?
While probate can often be pretty straightforward, many people would prefer not to go through it. Some of the reasons people avoid probate include:
1. It could be slow – In certain situations, it can take the probate court years to finalize a case, particularly when it involves a contested or complicated will.
2. It is very public – Given that it is a legal proceeding, matters in probate court tend to go out and are preserved in the public record.
3. It can be very expensive – While expenses vary from state to state, many states usually have administrative expenses, attorney costs, and executor fees as part of probate costs.
Given the drawbacks of the probate process, it is critical to work with a reputable law firm if you are interested in avoiding probate. Contact the Wood Law Group today as we provide all manner of probate services that families, spouses, children, and other beneficiaries of the deceased may need.
Do Bank Accounts Have to Go Through Probate?
Whether an account will go through probate is usually dependent on whether it was a joint account or in the deceased’s name. Similar to real estate and property, ownership of a bank account can take several forms.
If an account was in the control of two people or more individuals, there will be a right of survivorship, which means the surviving children, spouse or other beneficiaries will inherit the account without needing probate.
Similarly, if an account was held only in the owner’s name but with a beneficiary designated, the latter could go to the bank and claim the money in the account without needing to go through the probate process.
Conversely, an account will typically have to go through probate if the account is in the deceased’s name with no beneficiary or co-owners.
If you need advice on how to go about probate, contact the Wood Law Group, a professional law firm in Las Vegas, NV to get the assistance you need. Our attorneys can provide an initial consultation on your case and get started understanding your needs today.
What is the Bank Account Beneficiary Probate Process?
Creating an estate plan can be a complicated process that feels overwhelming for those involved.
The good news is that you can follow a few simple rules to get started on setting up a plan that will transform your account into a payable-on-death (POD) account with beneficiaries.
Who Can Be an Account Beneficiary?
Before you create your POD designation, you will need to determine who is going to be the beneficiary of the account. This could be anyone from your best friend, to your spouse, to your children. It is even possible to designate several beneficiaries to a bank account.
Some financial institutions may require that you fill in forms that ask for the Social Security number of the beneficiaries. This would mean that you have to contact them and inform them of what you intend to do.
You can also designate nonprofit organizations and charitable groups as account beneficiaries, as long as they are recognized as charitable organizations by the Internal Revenue Service.
Limited liability companies, partnerships, and corporations cannot be designated beneficiaries of a bank account.
What Are the Rights of a Beneficiary?
As long as you are alive, you control your bank accounts and can close the account, spend money and even change beneficiaries. Your account will continue to operate just as it did before you designated a beneficiary.
The beneficiary will typically not have any rights to the money in the account until your decease. The financial institution may refer to this type of account as an “in trust for” or ITF account.
When Can an Account Beneficiary Claim Account Assets?
A beneficiary has the right to collect any funds in the account after your decease but not during your life.
All they would need to do is head to the bank with proper identification and a certified copy of your death certificate.
The institution will then require them to complete a few forms, after which the money in the account will be transferred to them. Depending on state laws, there may be a short waiting period and creditors may have a right to have their debts settled first.
Given the risks involved in the probate process, it is often preferable to avoid it by working with a probate attorney. By working with a Las Vegas asset protection attorney from the Wood Law Group, you can potentially increase the control you have over your final wishes and the funds in your account.
Spare your spouse or children the burden and stress of prolonged probate processes by contacting us today.
What Are a Probate Bank Account and Joint Accounts?
Jointly owned accounts usually pass to a surviving owner if they have the right of survivorship.
Conversely, if tenants have a joint tenancy in common, then each person’s interest will be distributed according to the estate plan crafted by the deceased before his death.
For instance, if one of two business partners dies, their co-owner’s share will typically flow to her beneficiaries rather than her surviving partner.
If you have an account held jointly with your spouse with the right of survivorship and you pass on, your spouse, who is the surviving co-owner will then become the sole owner with a right to the funds in the account.
In general, you can avoid probate in joint bank accounts by establishing:
- Transfer on Death (TOD) accounts, otherwise known as beneficiary deeds.
- Payable on death designation (POD) accounts
- Joint accounts with right of survivorship
Will Banks Release Money Without Probate?
Banks will typically release money up to a certain amount without the requirement for the beneficiary to go through probate.
Still, it is important to remember that each institution has its limit on whether you need probate or not. Moreover, each institution will also have its own rules on whether the threshold is to be applied to only the balance in the account or the overall value of the estate.
Some financial institutions and banks require that beneficiaries go through probate for a set minimum balance, whereas some will state that you need probate for a set minimum total estate value.
It is also important to note that the final decision will thus be up to the bank, which has the authority to request that probate be conducted before releasing any bank balances, even if the value is below what is stated in their items as the threshold.
Contact the Wood Law Group today for professional legal advice. We have worked on all manner of probate cases, and we use our experience garnered over the years to help clients ease the estate process after a loved one passes away.
How to Avoid Bank Probate
Regardless of the reasons you intend to avoid probate, there are several steps that you can take. These include:
1. Have a small estate – Most states have an exemption floor, and hence a small estate may be deemed below the threshold. You can check the limits in your state for what the level is.
2. Give away assets early enough – You might avoid probate by giving away most of your funds before your death. This will not only reduce the chances of a probate process but might also eliminate or reduce future state and federal taxes.
3. Make accounts payable on death – bank accounts payable on death will usually go directly to the designated beneficiary upon your death without having to be subjected to probate.
4. Establish a living trust – Assets held in trust are not part of your estate upon your death. You will typically just be a trustee to the funds in trust and be required to distribute the money under the terms you set out in the agreement.
5. Have a Joint bank account – Making a spouse or other beneficiary a joint owner makes it possible for the funds in the account to be transferred without needing probate.
There are many reasons to avoid probate, including the cost, the speed of execution, and how public it can be.
Working with a lawyer during or before the probate process can help you get up to speed on relevant regulations, including the state limits on probate accounts, what type of account to have, the rights of the beneficiary, and how to avoid probate.
Contact the Wood Law Group today. Our skilled and experienced team can provide you with the information you need if you are facing the probate process.