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Estate planning may use beneficiary designation to avoid probate

On Behalf of | Apr 27, 2017 | Estate Tax

Avoiding probate is a popular subject in California and elsewhere. It is often blogged about online and discussed in general by persons contemplating or in the process of putting together estate planning components. Some people prefer to have their heirs avoid the time-consuming and public nature of the probate process.

One way to avoid probate on some assets is by filling out beneficiary forms on life insurance policies. This will cause payment of the death proceeds to go directly to the designated beneficiary and not to the probate estate. Such proceeds will escape probate treatment.

What some people may not readily realize is that the same principle applies to other kinds of assets that they own. For example, with respect to checking and savings accounts in banks, the execution of a payable on death form will put the funds in the hands of the beneficiary listed on the form at the death of the owner. This avoids probate.

Most retirement accounts, investment accounts, annuities and similar asset funds have beneficiary designations. The funds will go to the beneficiary directly and avoid probate if the beneficiary section designates the name of a chosen heir. However, where any of the foregoing accounts or policies do not state a beneficiary, the funds will go by default to the estate upon death of the owner. If the designated beneficiary dies before the owner, the fund will go to the estate and be subject to probate, unless the owner puts a new beneficiary on the form after the first beneficiary dies.

In California and elsewhere, these are not do-it-yourself suggestions for estate planning. Legal exceptions and a multitude of legal and tax considerations may have to be considered prior to making an appropriate and effective choice. That is why estate planning is more effective and safe when done in cooperation with an estate planning attorney.

Source:, “Avoiding probate with beneficiary designations: Part 1“, Chris Nolt, April 14, 2017


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