In the past, I have written about the importance of avoiding probate. Even in a simple probated estate, you can expect cost, time and inconvenience to be substantially greater than if probate is avoided. The probate process, whereby the local city or county will supervise the collection of the assets, the payment of debts and ultimately the distribution of the assets, oftentimes becomes more mysterious and problematic than anticipated.
Probate is avoided if assets are jointly titled with a survivorship right, have a beneficiary designation, or pass through a Revocable Trust. If assets are in your name upon your death and pass through your Will, there will be probate. The ability to avoid probate is within our control; meaning, regardless of the amount of assets probate can be avoided.
For example, even professionals such as doctors, lawyers, CPAs, and architects can avoid probate on their professional corporation or professional limited liability company interest despite state licensing issues. In other words, unlike a share of stock in IBM, a professional cannot transfer his interest to a Revocable Trust without jeopardizing the licensing requirements under state law. However, the solution is provided by state statutes that have enacted the Uniform Transfers on Death Act (in Virginia, see Virginia Code Section 64.1-206.7 and 64.1-45.3). These Transfer on Death ("TOD") statutes allow a professional to name a Revocable Trust as the recipient of the certificate upon death. These TOD accounts are also very helpful for nonprofessionals with respect to other types of ownership interests, like stock or bank accounts, that typically do not have beneficiary designations.
In sum, where there is a will there is a way, and TOD designations should be explored to ensure no assets pass through probate.
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