Estate planning: Bypassing probateSearch for your credit union
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Here’s information about some of the different ways to avoid having your estate go through probate.

Probate avoidance methods allow you to reduce the size of your probate estate. Importantly, while assets transferred under these methods avoid probate, they still count as part of your estate for purposes of calculating any estate tax owed.

Joint Tenancy

Some of your assets may already be set up to bypass probate. For instance, if you own your home and any taxable investments with your spouse or partner in joint tenancy with right of survivorship, he or she automatically inherits your share after your death. Therefore, no probate is required.

Transfers by contract

Assets that are transferred by contract, such as annuities, life insurance proceeds, and retirement accounts, including IRAs and 401(k)s, transfer directly to your designated named beneficiaries without going through probate.

Pay-on-death and transfer-on-death forms

Taxable assets that you have sole ownership to are subject to probate. But it’s easy and free to add a special designation that allows these assets to bypass the process.

For savings and money market deposit accounts, checking accounts, CDs/share certificates, and Treasury securities, you simply complete a pay-on-death form to name a beneficiary to receive the property when you die. And if available in your state, you can fill out a transfer-on-death form for stocks, bonds, and mutual funds outside retirement accounts.

With these designations your beneficiary has no right to the assets in your accounts until your death. So you retain complete control during your lifetime.

Revocable living trusts

A revocable living trust is similar to a will in several ways. You can transfer property to beneficiaries after death through a living trust. You can also name alternate beneficiaries in a living trust in the event your primary beneficiaries predecease you.

Unlike a will, however, assets in a living trust bypass the probate process, and generally pass to your beneficiaries without delay.

Therefore, if you have significant assets a revocable living trust can be an efficient way to transfer property to your beneficiaries. A living trust can also be useful if you’re older or are in ill health, or you own the types of assets that you don’t want tied up during probate process, such as a small business.

A living trust can also be beneficial if you own real property in another state, since property held in a living trust avoids a separate out-of-state probate proceeding.

Additionally, a living trust generally doesn’t have to be filed with a court, in contrast to a will and other probate records that become public documents. Therefore, if you have a particular need for privacy, a living trust can limit the information available to the public.

Living trusts, however, aren’t for everyone, and used by themselves don’t reduce your income or estate taxes.


Article is for educational purposes only and is not intended to provide specific tax or legal advice. For answers to tax questions, please see your tax professional. For legal questions, consult an attorney.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (800) 369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. The Representative may also be a credit union employee that accepts deposits on behalf of the financial institution.

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