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Probate takes time, exposes your affairs available to the public, and costs money -- perhaps as much as 5% of your estate.

Generally assets have to go through the probate process. However, assets can also pass to your heirs without going through probate. Perhaps the biggest advantages to avoiding probate are:

  • Your beneficiaries gain almost immediate access to your assets.
  • The passage of assets is difficult to challenge.
  • There are no probate costs to reduce the amount of the asset.

Since probate applies only to the assets in your Will, any property that passes by other means avoids probate. For example, property titled in "joint tenancy with a right of survivorship" automatically passes to the other named person, no matter what your Will says. The articles mentioned below discuss other methods of avoiding probate. The last one is a chart which compares the various methods.

If you are not familiar with the concept of probate, consider reading about probate before reading the rest of this one. 

Even if all of your valuable property passes by one of the means discussed in this article, it is advisable to also have a Will to take care of any property or questions that might not be accounted for.

When people become ill, a caregiver's name is frequently added to a bank account to make it easier to pay bills. If the person dies, the question often remains whether the intent was to give the caregiver additional money, or whether the rest of the distribution needs to be rebalanced.  If you add a caregiver to a bank account, either write a letter indicating that the balance in the account is to be an additional amount to the caregiver, or amend your Will. 

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Probate Wills 101

Assets That Pass By The Terms Of A Trust

Assets that are put in a trust while you are alive do not go through probate.

A trust is a legal entity that is like a paper bag in which you've put whatever assets you want. On the bag, you put instructions for use of the contents. You can hold onto the bag, or give it someone else. The person that holds the bag must follow the instructions.

Trusts can generally do everything a Will can, and sometimes they can do things that a Will cannot. For example, a trust can be set up to hold assets for a minor beneficiary. It can pay for certain expenses which are defined by the grantor (such as education or medical expenses) until a certain age, when either the income or principal or both are passed to the beneficiary.

A trust can be created while you (the "grantor") are alive, in which case it's called an "inter vivos" or  "living trust."

A trust can also be created by the terms of a Will, in which case it's called a "testamentary trust."

Living trusts can be either "revocable" or "irrevocable."

  • A revocable trust can be revoked (cancelled) or changed by the grantor. Things can be taken out or put into the trust. Instructions can also be changed.
  • An "irrevocable" trust cannot be changed after it is created. These trusts are used to avoid estate taxes as well as probate. If you would like to check to see if estate taxes are an issue for you, see Estate Tax.

Revocable Living Trusts are often used to avoid probate of the assets placed in the trust. The trustee whom you designate to serve upon your death distributes assets to the beneficiaries as described in the trust without court involvement.

Writing a Revocable Living Trust is a lot like writing a Will. However, with a trust you must also actually transfer ownership of your assets to the trust. Since you can designate yourself as trustee, you still have full control of the property. For a discussion on using a living trust to avoid probate, see Revocable Living Trusts.

Although there are books and forms available to teach you how to create a trust, it is not advisable to set up a trust without at least speaking with a qualified attorney.

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Ways To Transfer Assets At Death

There are four groups of ways in which your assets can pass to your heirs.

We will look at these methods for avoiding probate, one at a time -- after we explore what happens to people who have an interest in property as collateral for a debt.

The four basic means of transferring assets are:

By Law

Assets that automatically pass by law to your heirs because of the way that title is registered. Assets which are registered this way avoid probate. For example, if your house is registered in your name and your spouse's name "as joint tenants with the right of survivorship," the house passes automatically to the survivor.

By Contract

Assets that pass by contract go directly to your beneficiaries without going through probate.

By terms of a Trust

Assets can also be passed to your heirs without going through probate if they are in a trust. Assets will pass to your heirs according to the trust instructions. Although a trust can be challenged, it's a much more difficult and expensive process for the person making the contest than a challenge to a Will.

By Probate

All other types of assets, whether you have a Will or not, will pass by means of probate.

  • If you have a valid Will, your assets will pass to your heirs according to the terms of the Will.
  • If you do not have a Will, your assets will be distributed according to your state's intestacy laws.

Effect Of Method Of Transferring Assets On Lien Holders

A "lien holder" is a person or entity that has an interest in property as security to repay a debt. For instance, a mortgage company is the lien holder on a house to the extent of the outstanding debt secured by the residence.

Transfer of title, even due to death, does not generally extinguish the debt or the lien. If the terms of the lien so provide, death may trigger a forced sale. If that is the case, the new owner receives the difference between the sale price and the debt.

Otherwise the new owner receives the property subject to the lien.

For example, if you have a house worth $200,000 and owe the bank $100,000 on the house when you die: the bank continues to have the interest to the extent of $100,000 in the property no matter who becomes the owner. The new owner takes over the debt.

Assets That Pass By Law

If yours is the only name registered as owner of an asset, the asset has to pass through probate -- either under the terms of your will or the laws of intestacy (if you die without a Will).

There are other methods of registering title of an asset which automatically pass title to another person on your death.

Assets held in the following ways will be distributed to your survivors with no or limited probate because the type of ownership in itself determines who receives the property.

Joint Tenancy

Joint tenancy is when two or more people own an asset equally together. While you are alive, the other person has a stake in an asset registered in this manner. You can't change your mind about their ownership without their consent.

  • Joint Tenancy With The Right of Survivorship means that the share of the property held by the deceased person automatically passes to the remaining survivor(s) by law. The asset does not pass through probate.
  • Joint Tenancy Without Right of Survivorship (also known as "Tenants-In-Common"): Your share of ownership in an asset registered in this manner will pass through probate. It will be distributed according to your will, if you have one, or, if you don't, according to your state's intestacy laws.

Tenancy by the Entirety

Tenancy by the entirety is a joint tenancy with rights of survivorship between a legally married husband and wife. Like Joint Tenancy With Right of Survivorship, property titled in this manner automatically passes outside of probate.

Community Property

Community property is most property owned by married people who live in community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In these states, both spouses are considered to equally own everything accumulated while they are married. There are exceptions for assets that were owned before the marriage, received as a gift, or inherited. Some community states offer probate shortcuts for community property.

Community Property with Right of Survivorship

Arizona, Nevada, Texas and Wisconsin also allow you and your spouse to own property as "community property with right of survivorship." This title registration works just like Joint Tenancy With Right of Survivorship: property held this way passes automatically to the surviving spouse when the first dies.

Assets That Pass By Contract

Some property can pass directly to your heirs by naming the heir in a contract type situation. Even though the assets pass directly to your heirs, the money is included in your estate for estate tax purposes. Such assets include:

Payable on Death Accounts For Bank Accounts

You can pass title immediately to your heir by registering your bank account as a "payable on death account." In this type of account:

  • You control the money while you are alive.
  • Whatever is in the account when you die automatically passes to your beneficiary. All your beneficiary has to do is show up at the bank with identification and a copy of your death certificate and ask for the money.
  • No probate is necessary.

Totten Trusts for Savings Accounts

Totten Trusts are the name given to "Payable On Death Accounts" when used with a savings bank account and certificates of deposit.

  • Usually only one beneficiary can be named per account.
  • All that is necessary to establish a Totten Trust is a signature card at the bank. There is no formal document to create like with a trust.
  • There is no cost to the account holder for setting up a Totten Trust.

Transfer on Death Stock and Bond Accounts

The Uniform Transfer-on-Death Security Act allows you to transfer stocks and bonds to other people upon your death.

  • The process is very simple: just ask your broker or mutual fund company for the form used to designate the name of the person you want to inherit the securities after your death.
  • When the time comes, your named beneficiaries can claim the securities directly from your broker or investment company with i.d. and a copy of the death certificate.
  • Transfer on Death forms are legal in every state except Louisiana and Texas.

Transfer-on-Death for Vehicles

If you live in Connecticut, Kansas, Missouri or California, you can also register your car with a transfer-on-death designation. Even if you don't live in one of these states, it might be worth checking with your Department of Motor Vehicles, since more states are expected to adopt this law over time. (In your favorite search engine, type "Department of Motor Vehicles + The Name Of Your State").

  • The process simply involves paying a small fee and filling out a form provided by the Department of Motor Vehicles with the name of the person to whom you want to leave the vehicle.

Retirement Plan Beneficiaries

You can name a beneficiary for most of your retirement accounts, including IRAs and employer plans.

  • Your beneficiary will automatically inherit the funds left in your account at your death.
  • If you name your estate as the beneficiary, the assets will instead be distributed according to your Will.

Visit our Retirement Planning section to learn more about distributions upon the death of a retirement plan account holder.

Life Insurance Beneficiaries

Money paid to a beneficiary of a life insurance policy also avoids probate, unless you designate your estate as the beneficiary.

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Passing Assets By Means Of Other Entities

There are entities other than a trust that can be used to pass assets. For instance, a corporation or a limited liability company.

The ownership interests in the entity will be in your estate and pass through probate (unless they are titled in one of the manners described above). However, the assets owned by the entity will not pass through probate.

A Chart Which Compares Various Methods Of Avoiding Probate

Probate Avoidance Method

Available To

Control Over Asset

Appropriate For

Upon Death

Joint Tenancy With Right of Survivorship


Shared with joint tenants

Any type of property

Your share is automatically distributed equally to the other joint tenants

Tenancy By the Entirety

Married people

Shared with spouse

Any type of property

Asset automatically becomes fully owned by spouse

Community Property

Married people who live in AZ, CA, ID, LA, NM, NV, TX, WA, WI

You and your spouse each control one-half of the property

Any type of property

Limited Probate Proceeding required

Community Property with Right of Survivorship

Married people who live in AZ, CA, ID, LA, NM, NV, TX, WA, WI

You and your spouse each control one-half of the property

Any type of property

Asset automatically becomes fully owned by spouse

Payable on Death Accounts / Totten Trusts


You control the asset entirely

Bank Accounts; Certificates of Deposit

Asset automatically transfers to designated beneficiary

Transfer on Death Accounts


You control the asset entirely

Stocks, Bonds, Autos in a few states

Asset automatically transfers to beneficiary

Life Insurance Beneficiary Designation

Owner of Life Insurance Policy

Owner controls the asset

Life Insurance

Proceeds payable to designated beneficiary

Retirement Plan Beneficiary Designation

Owner of Retirement Plan Account or Benefits

Owner controls

Retirement Plans

Proceeds payable to designated beneficiary



Trustee (Can be grantor of trust)

Any type of property

Proceeds payable as specified in trust document