When figuring out how to distribute your property after your death, one of the first things you may need to look at is whether a certain piece of property will go through probate as it is currently titled. You may also need to consider whether you want a particular piece of property to go through probate as a way to distribute it to the person you wish to receive it.
The more property you keep out of probate, the more your taxable estate reduces. In addition, if the property you leave to your loved ones does not have to go through probate, then they will have quicker access to it. Below is a look at how your property is titled, along with what that means for the probate process.
If you title your property jointly
If you own property with someone else, then you own it jointly. If you own real estate or an account jointly with rights of survivorship, then the other owner or owners continue to own the entire property upon your death. For example, if you and your child own an account jointly with rights of survivorship, during your life each of you technically owns half of the account. Upon your death, your child receives automatic ownership of your half of it.
Married couples often own joint property as “tenants in the entirety,” or the government considers property as community property in certain states. Oregon is not a community property state, so spouses would then own the property as tenants in the entirety.
Continuing with the previous example, if you own property jointly with your child without rights of survivorship, then you may dictate how to distribute the portion of the property you own upon your death. For example, you may bequeath your portion of the property to whomever you choose. This is legally referred to as “tenants in common.”
If you title your property in your name alone
Any property you own in your name alone will need a method of distribution such as through probate. For example, if you own a car in your own name, then you may bequeath it to whomever you choose in your will. You may also have other property that is in your name alone that will not need to go through probate. Accounts for which you can fill out beneficiary designation forms do not have to go through probate upon your death.
For instance, your retirement account and your life insurance policies must designate a beneficiary. You can transfer bank accounts through “payment on death” forms, and investment accounts through “transfer on death” forms. These forms allow the other party to come in and take ownership of the accounts without having to go through probate first. These forms override anything in your will, so you need to be sure not to even address these assets in your will.
If you want to change the way your property is titled
You may be among the many people who don’t want their family members to have to wait for access to certain property. You may change the way the property is titled, add a beneficiary designation of some sort or even put the property into a trust for the benefit of certain loved ones. Estate planning allows you numerous options that fit your situation best.