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Avoiding Probate by Using Joint Accounts and Transfer-on-Death Accounts

If you are like most people, you want your loved ones to be able to wrap up your affairs after your death with as little drama and expense as possible. The key to making that happen is to keep as much of your property out of probate court as possible. One simple way to keep certain assets out of probate is through the use of joint accounts and transfer-on-death accounts.

Joint accounts, as the name implies, are held jointly between two or more people. When one account holder dies, the account does not go through probate. It automatically becomes the sole property of the other account holders. Joint accounts can include:

  • Checking accounts
  • Savings accounts
  • Certificates of deposit

In California, an account that is titled jointly is presumed to belong to the survivor, absent clear and convincing evidence to the contrary. While this is a simple concept, there is sometimes confusion between holding an account jointly and merely adding an authorized signer who can make payments on the account holder’s behalf. An authorized signer has no rights to the account when the account holder dies. However, an elderly person may intend to add someone as a signatory when in fact they have just made the person a joint owner of the account. When the elderly person dies, there can be a serious dispute over intent. For this reason, it is critical to make sure the account is properly titled to avoid all doubt.

A transfer-on-death account is another simple way to minimize probate costs. Unlike a joint account, a TOD does not give a beneficiary any control over the assets while you are alive. When a TOD account holder dies, the personal representative sends a copy of the death certificate to the bank or brokerage and the account is then re-registered in the beneficiary’s name. Here are a few other important points about TOD accounts:

  • TOD accounts can supersede a will — If your will leaves everything to your children, but you also have a TOD account specifying your brother as beneficiary, your brother will receive the TOD account even though the will says to give everything to your kids.
  • TOD accounts are still accessible to creditors — If your estate is debt, the estate’s creditors can pursue the money in a TOD account, even though the account passes outside the probate system.
  • Surviving spouses take precedence — If you have a surviving spouse, he or she will receive the account, and only after the spouse’s death will the TOD account pass to your named beneficiary.

Transfer-on-death mechanisms are also available for assets like vehicles, securities and real estate. It’s best to consult with an attorney if you want to explore these options.

The California lawyers of The Sterling Law Group in Roseville and Sacramento focus on estate planning. We help clients minimize the expense of probate using joint accounts and TOD options as part of comprehensive estate planning. Find out what we can do for you by calling 916-790-9202 or by contacting us online today.

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  • Roseville Office
    300 Harding Boulevard
    Suite 205
    Roseville, California 95678
    Phone: 916-790-0852
    Fax: 916-760-2701
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    Sacramento, California 95814
    Phone: 916-790-0852
    Fax: 916-760-2701
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