One of the simplest ways for someone to ensure their property goes to the people they choose when they pass away is to designate a beneficiary. The beneficiary receives the asset when the owner dies, and the property avoids going through probate.
Not all assets can be transferred this way, but many can. Using beneficiary designations in Melville estate planning cuts the delays and expenses associated with probate and ensures your loved ones have immediate access to at least some of your property. Reach out to our trusted team of estate planning lawyers to learn more.
When someone dies, all the assets they owned solely in their name must go through probate. Probate is a court-supervised process that involves collecting the deceased person’s (decedent) assets, paying their debts, and distributing the remainder according to the terms of the decedent’s will or the laws of intestacy. While an estate is in probate, the decedent’s heirs do not have access to the property.
Probate can take several months if there is enough cash in the estate to pay the decedent’s debts. It might take several years if the estate administrator must sell the property to pay debts. There are also expenses associated with probate, including court and attorney’s fees.
When the decedent has a will, the people named in the will are also beneficiaries. There is a popular misconception that the people who inherit through a will are heirs, but heirs are family members who inherit when someone dies without a will. Unlike other transfers to beneficiaries, property inherited through a will is subject to probate. A Melville attorney could provide further advice about how to limit the amount of property transferred to beneficiaries through a will and instead find other means of allocating assets through an estate plan.
Most people have assets that can be passed to beneficiaries rather than through probate. Life insurance policies, retirement accounts, and pensions usually require the owner to name a beneficiary who will receive the asset upon the owner’s death. When an estate plan includes one or more trusts, each trust must have at least one beneficiary.
It is possible to designate a beneficiary for a bank account in Melville. The law allows an account owner to include a payable on death (POD) designation to a checking and savings accounts and certificates of deposit (CD). When the owner dies, the person named becomes the new owner of the account without the need for probate.
Sometimes, making a spouse or an adult child the joint owner of the account makes more sense. An attorney could explain the risks and benefits of joint ownership versus beneficiary designation when it comes to bank accounts.
New York Real Property Law § 424 allows a person to register a deed that transfers the ownership of real property to a beneficiary upon the owner’s death. Using the transfer-on-death deed could have numerous advantages, including keeping a heritage property in the family and insulating the value of the property from estate tax. An owner can name multiple beneficiaries on the deed, and each would have an equal share in the property.
Proper designation of beneficiaries can simplify estate planning and reduce costs. However, any carelessness or ambiguity can lead to family disputes and even legal action. Reviewing your plans periodically with a skilled Melville attorney can minimize the chances of inadvertent mistakes and unintended consequences.
Using the full legal names of the people you designate as beneficiaries is important. Update the designations if a beneficiary changes their name. It is always wise to name a contingent beneficiary to receive the property if the original beneficiary dies first or refuses the property.
Significant events like a divorce in the family or the death of a spouse or child should prompt a close review of the entire estate plan. Revising the estate plan should be part of the property division process in a divorce—typically, the former spouse is removed as the co-owner or beneficiary of any property and removed from the will.
Passing property directly to beneficiaries on your death reduces the inconvenience and expense of probate. If your estate is large enough to be subject to estate tax, beneficiary designations in Melville estate planning might reduce or eliminate the tax.
Speak with an experienced lawyer from our firm to develop the best estate planning strategy. Get in touch today.
