This past spring I did a set of Council on Aging seminars on the legal issues single seniors face. If you are single, and you want your children or friends to avoid the time and expense of probate after you die, you need to make sure that no asset of yours is in your sole name at the moment of your death. There are four basic ways to avoid probate, and the strategy varies depending on the asset:
Name a joint owner. If you own an asset, stock, bank account, or even real estate jointly with someone, legally you each are entitled to 100% of the asset. Upon your death, your interest in the asset expires, leaving the survivor as the sole owner. Of course, this strategy has some potential drawbacks while you are still alive. Any joint owner of your bank account will have access and the ability to withdraw from it. The joint ownership interest can also be attached by the joint owner’s creditors. However, as long as you are not worried about these possibilities, joint ownership is an inexpensive way to avoid the probate of some assets.
Name a beneficiary. Some assets, such as life insurance and your IRA, 401(k), or similar tax deferred accounts, require you to a name a beneficiary to receive the asset after you die. In addition, many investment accounts – although not all of them – give you the option to name one or more beneficiaries through a “transfer on death” (TOD) or “payable on death” (POD) designation on the account. If you decide to name beneficiaries on your accounts, be sure to keep track of them so you can modify them if you change your mind.
Tell your agent (under your durable power of attorney) to give things away before you die. This option requires you to have a Power of Attorney as well as discussions with your named agent about your intentions. You will need to ensure that the person you name as your agent understands your wishes as to who gets what; you have to trust that person to get these things done before you die. As long as you trust your agent, this can be a simple way to avoid probate while keeping control of your assets until you are close to death. Note that certain tax issues with this option may exist and you should consult a tax professional before making gifts.
Create a revocable and amendable trust. With this option, you can create a trust, name yourself as the trustee, and transfer your house and other large assets to yourself as trustee. You will retain complete control of the assets while you are alive but, through the trust provisions, you can name a successor trustee to distribute all trust assets after your death, thereby avoiding the delay and cost of the probate process.
For more information on this or other legal issues that single seniors often worry about, you can contact me at (508) 860-1470 or firstname.lastname@example.org. You can also view my 10-minute Q&A Fireside Chats on Frank and Mary’s YouTube channel, www.YouTube.com/ElderLawFrankAndMary.