When a Missouri resident passes away, their assets are usually distributed to their heirs through a legal process known as probate. However, some assets can be transferred outside of probate through certain methods.
Joint tenancy with right of survivorship
When two or more people own property together as joint tenants with right of survivorship, the property automatically passes to the surviving owners when one owner dies. This is a common way that married couples own property, as it ensures that the surviving spouse will automatically inherit the property without the need for the time-consuming probate process.
Payable-on-death (POD) accounts
A POD account is a bank or investment account that has a named beneficiary who will inherit the account upon the owner’s passing. A POD account allows the owner to maintain control over the account during their lifetime but ensures that the account will pass directly to the beneficiary without the need for probate.
Transfer-on-death (TOD) accounts
Like POD accounts, TOD accounts allow the owner to name a beneficiary who will inherit the account upon the owner’s death. This type of account is often used for stocks, bonds and other investment types.
When you purchase a life insurance policy, you name a beneficiary who will receive the proceeds of the policy upon your passing. Life insurance is not subject to probate and ensures that the beneficiary will receive the funds quickly and efficiently.
A trust is a legal entity that holds assets for the benefit of the trust’s beneficiaries. When you set up a trust, you transfer assets into the trust and name a trustee who will manage the assets for the beneficiaries. Trusts are not subject to probate and allow for greater control and flexibility over the distribution of your chosen assets.
Being proactive with estate planning
It’s crucial to note that while non-probate transfers can be an effective way to transfer assets with little delay, they should be carefully considered and planned for. Understanding the nuances of each method ensures that these types of transfers are appropriate for your situation and that your wishes are properly documented and executed.