Justin, when you designate that an annuity or an IRA is to pay at death to a specific person rather than to a trust, is probate required? – Dana
Dana, Thanks for the question. There are four main ways to keep a financial account out of probate court. You can: 1) grant full or partial ownership of the account to another person, 2) transfer ownership of the account to a trust, 3) name another person as death beneficiary on the account, or 4) name a trust as death beneficiary on the account.
Any one of these four options will keep the account out of probate court. In direct response to your question, naming a specific person as death beneficiary is fine for that purpose, even if you have a trust.
Deciding between the four probate-avoiding options listed above can be difficult, though. Several other factors can enter the picture. For instance, some options give you greater control over your account until your death while some give less. Some options have better tax consequences than others. With some options, you can change your mind at any time; with others you’re locked in. Some options can even help shelter your accounts against the high costs of long-term care.
It’s easy for an estate planning attorney, a financial advisor, or an accountant to give you several options if your only concern is probate-avoidance. But a good discussion on the topic will go further and should address these additional issues. These are the types of discussions we have with clients every day, and we’re always willing to give a no-charge strategy session to first-time clients. Give us a call today to set something up.
If you’d like to learn more about these options and how to choose between them, order a copy of You Need A Plan at YourPlanMatters.com. If you’re certain you’ve already set up the best plan for your circumstances, pass along that website to those you know who haven’t. It’s an easy way to point someone in the right direction.