There are a number of steps you can take without even hiring a lawyer to avoid Probate Court. For some assets, you can set things up so ownership automatically transfers upon death, and therefore the transfer doesn’t have to go through Probate Court. This is the same type of process that happens with life insurance.
Designate Beneficiary on Bank Accounts and Investment Accounts.
An individual with an account at any bank can designate a beneficiary who will inherit money in the account after their death. A bank account with a named beneficiary is called a payable on death (POD) account. People who opt for POD accounts do so to keep their money out of probate court in the event that they pass away. A transfer-on-death (TOD) arrangement is for stocks, bonds, mutual funds, or other investment assets. Both POD and TOD agreements offer quick means of dispersing assets, as both avoid the probate process, which can take several months.
It is easy to convert an account to a POD or TOD account. The account holder needs only to notify the bank of who the beneficiary should be. The bank, on its end, will give the owner of the account a beneficiary designation form to fill out. The completed form gives the bank authorization to convert the account to a POD or TOD. Make sure you keep copies of the completed forms.
The named beneficiary is not entitled to any of the money in the account while the account holder is still alive. Once you provide the death certificate to the bank, the beneficiary automatically becomes the owner of the account, bypassing the account holder’s estate and skipping probate completely. Some banks will not pay out immediately but will hold the account for weeks or months. In the event that the owner of a POD account passes away with unpaid debts and taxes, their POD account may be subject to claims by creditors and the government.
If your institution does not allow multiple or contingent beneficiaries, you should consider naming your Revocable Trust as the beneficiary.
Make Vehicle Ownership Transfer on Death.
The Vermont Department of Motor Vehicles allows ownership of vehicles to be designated Transfer on Death. Complete and file the form “Transfer on Death/Transfer of Interest in Vehicle” with the DMV. Ownership will automatically transfer to the named Beneficiary once a Death Certificate is provided to the DMV. The Beneficiary will have to pay Registration, Tax, & Title fees, except if the Beneficiary is the spouse, mother, father, child, grandparent or grandchild of the owner, or a trust established for the benefit of any such persons. At time of death file with the DMV the Gift Tax Exemption form. If the vehicle is going to the spouse upon death, this should happen automatically even without the Transfer on Death form. (See DMV Deceased Owner Informational Bulletin)
