Last week, I talked about trusts. They’re rules of ownership and act like a basket to hold whatever assets are owned in trust. They can continue to keep chugging along, even when you die. The trust will usually say who controls the asset after you die (the trustee) and who benefits after you die (the beneficiary). And, because of that, the assets controlled by the trust are Thing 1 assets. They’re dealt with automatically. They don’t hit your estate. And they don’t need a probate to get to where they need to go.
But, it doesn’t take a trust to move something automatically. There are other ways you can set up your assets to not be stuck.
One of the most typical Thing 1 asset is life insurance. When you purchase the insurance, you tell the agent who they’re supposed to make the check out to when you die. That’s a beneficiary designation. You designate who benefits from the asset when you die. Other things can have a beneficiary designation, like retirement accounts and pensions with survivor benefits.
Other assets can be designated to move upon your death. You can list a payable on death designation for bank accounts. You can list business interests and, in some states, real estate to transfer on death to a recipient. In Minnesota, we can even do that with cars. We’re a terrible state for taxes, but great for avoiding probate.
If you own something with someone else, you can own it with rights of survivorship. If you do, the asset will be owned by the survivor simply by surviving the other owner.
The assets aren’t stuck in your estate. They aren’t subject to the terms of a will. They don’t need a personal representative to transfer them. And they don’t need wait for a court proceeding to transfer. They can move very quickly.
That sounds great.
And for many situations they can be.
But not always.
Next week on the website, I’ll talk about when automatic transfers can actually cause problems.
This week on the podcast, I’ll have some impressions from our yearly death nerd convention here in Minnesota, our State Bar Association Trust and Probate Conference. It’s our chance to dig into the deep minutia of estate planning and probate law… Don’t worry. That’s not what the podcast is about. There were also some really insightful subjects brought up by speakers that was more death stuff and less legal stuff. Head over to Spreaker, Itunes… or you know, the sidebar, to catch the highlights.