I probably hear some variation of this concern more than any other in consulting with estate planning clients: the desire to avoid probate. Whether they have heard horror stories about probate or have been through a rough experience themselves, many folks see avoiding probate as an important way to ease the burden on their loved ones after they pass.
There are two bits of good news for Tennesseans with this concern. First, the probate process in Tennessee is relatively straightforward and inexpensive compared with many other states. In itself, probate is nothing to fear. In fact, sometimes a little court oversight and help from an attorney can help assure surviving family members that they are handling affairs properly.
Second, and more importantly, there are some simple steps you can take to ensure that most if not all of your assets will be distributed outside of the probate process, just in the way your assets are titled. You just want to make sure that, if you are titling your assets as part of your estate plan, that it is done with purpose and an eye on the big picture. A good estate planning attorney can help you think through this process.
Payable on Death Accounts – Many bank or brokerage accounts allow you to designate a beneficiary to receive the contents upon your death. If an account has a POD beneficiary, that account will not pass through your will – so, will not go through probate – but will pass directly to your beneficiary.
Ownership with a Right of Survivorship – Any property you own that is properly titled jointly “with a right of survivorship” will not pass through your will, but instead passes automatically to the other owner(s). This is a specific form of jointly held property that must be designated with precision to pass outside of probate. Not only your bank accounts, but also your home or other real estate can be jointly held with another person with a “right of survivorship.”
For married couples in Tennessee, joint ownership is called ownership “by the entirety” and is even more strongly protected. Not only does your spouse gain full title to jointly held property without going through probate, but the law deems that you and your spouse each own all of your jointly held property, so the survivor does not take new possession but owned the whole from the start.
Beneficiary designations – Any life insurance policy, annuity, brokerage account or retirement account in which you have properly designated a beneficiary will not pass through your will (unless the beneficiary is your “estate”) but will pass outside of probate.
Real Property – In many circumstances, real property that you own including your home also does not have to go through probate to pass to the heirs you have designated in your will. But that property may be subject to the claims of creditors including TennCare.
The bottom line is that most of us don’t need to contort our assets into complex legal structures to simplify or even eliminate the need for probate. Talk with an estate planning attorney to help you with titling and beneficiary designations to develop a comprehensive plan for distributing your assets smoothly and according to your wishes.
Please contact us today online or by calling 800.705.2121 to discuss your legal options.