Founding Attorney
What happens to your assets when you pass away? Many people assume everything must go through probate, but that’s not always the case. Some assets transfer directly to beneficiaries, avoiding court delays and extra costs. Knowing which assets bypass probate can help you protect your estate and make things easier for your loved ones. Without proper planning, certain assets may end up in probate unnecessarily, causing delays and frustration. Taking the right steps now can help ensure a smoother process for those you leave behind and keep your estate intact for the people who matter most.
Assets That Avoid Probate
Not all assets go through probate. Some transfer automatically to beneficiaries, making the process faster and simpler. These assets typically have legal arrangements that allow them to pass directly to a named person without court involvement.
Here are some common types of assets that avoid probate:
- Jointly owned property – If property is owned as joint tenants with right of survivorship or tenants by the entirety, it automatically passes to the surviving owner upon death.
- Payable-on-Death (POD) and Transfer-on-Death (TOD) accounts – Many financial accounts, including bank accounts and investment portfolios, allow you to name a beneficiary. After your passing, the designated person receives the funds directly.
- Life insurance proceeds – If a beneficiary is named, life insurance payouts bypass probate and go directly to the recipient.
- Retirement Accounts (401(k), IRA, etc.) – Like life insurance, retirement funds pass to the named beneficiary without court involvement.
- Transfer-on-Death Deeds (TODD) – In Minnesota, real estate owners can sign a deed that transfers property upon death, avoiding probate.
Keeping beneficiary designations updated ensures these assets pass smoothly to loved ones. A little planning now can help avoid unnecessary complications later.
Trusts: A Powerful Tool to Avoid Probate
A trust is one of the most effective ways to keep assets out of probate. When property is placed in a trust, it legally belongs to the trust, not your probate estate. This allows for a smooth transfer to beneficiaries without court involvement.
There are two main types of trusts that help avoid probate:
- Revocable living trusts – You retain control of the trust during your lifetime and can modify it as needed. Upon your passing, the assets transfer directly to your beneficiaries without probate delays.
- Irrevocable trusts – Once created, this type of trust cannot be easily changed. Because the assets no longer belong to you, they bypass probate and may offer additional protections from creditors.
Trusts also provide privacy since they are not part of the public record like wills. By setting up a trust, you can help your loved ones avoid court fees, delays, and unnecessary complications.
Common Mistakes That Lead to Probate
Even assets designed to avoid probate can end up in court if certain details are overlooked. One common mistake is failing to name a beneficiary or keeping outdated beneficiary designations. If a named beneficiary passes away or is missing, the asset may go through probate.
Other common missteps include:
- Owning real estate individually instead of jointly or in a trust.
- Forgetting to fund a trust after creating it.
- Not updating accounts after major life events like marriage or divorce.
Regularly reviewing your estate plan can help ensure your assets pass smoothly to your intended beneficiaries without unnecessary delays.
How We Can Help
At Unique Estate Law, we help individuals and families structure their estates to minimize probate complications. Proper planning ensures that the right assets transfer directly to beneficiaries, reducing delays and unnecessary expenses. Whether it’s setting up a trust, updating beneficiary designations, or ensuring property ownership is correctly structured, we take a thoughtful approach to protecting your estate. With the right strategy, you can make things easier for your loved ones and keep more of your estate intact for their future.
Take Control of Your Estate Plan
Avoiding probate where possible can save your loved ones time, money, and stress. With the right planning, many assets can transfer smoothly without court involvement. At Unique Estate Law, we can help you create a plan that protects your assets and ensures they go to the right people. Contact us today to get started.