When a person passes away, many of their assets do have to go through the probate process. This can often take a significant amount of time before beneficiaries actually receive the inheritance that was left to them.
That being said, it is important to know that not all financial assets necessarily take the same route. There are ways to avoid having assets go through probate in certain situations. One common example is simply giving assets away as gifts in advance. As someone gets older, they may start distributing their wealth among their children on an annual basis, or they may begin giving away family heirlooms and other tangible assets. They are essentially trying to reduce the value of their estate before they pass away.
Beneficiary designations
Additionally, many financial accounts with beneficiary designations do not have to go through probate.
One example is a payable-on-death (POD) account. This is a financial account similar to a normal bank account, but the account owner can choose a beneficiary in advance. When the account owner passes away, that beneficiary becomes the new owner of the account, allowing them to gain quick access to the funds without waiting for probate.
Another example is a life insurance policy. Life insurance proceeds can often skip probate as long as the named beneficiaries are still available to receive the payout from the insurance provider. That is why it is so important to keep all beneficiary paperwork up to date.
Complex estate division
When going through probate or the process of distributing someone’s estate, things can become complicated when different types of assets and financial accounts are involved. It is important for those involved to understand exactly what legal steps they may need to take.