What happens to your property after you die? Well, that really depends on what plans, or lack thereof, you have in place for it. Without any planning, your property will be distributed to your heirs according to the state’s intestacy laws. To die intestate means to pass away without a will. Generally speaking, your property will pass to your closest surviving family. Without any surviving relatives, your property will escheat, or pass, to the state. With a comprehensive estate plan in place, however, there are several ways your property will be transferred upon your death.
How is Property Transferred at Death?
Some property will have beneficiary designations on them. These include things like life insurance policies. With these, the proceeds of the life insurance policies will pass directly to the named beneficiary. In other cases, accounts, such as bank accounts and financial accounts like securities holdings, will be payable on death or transfer on death accounts. This means that the proceeds from the account will pass directly to the named beneficiary on the account upon the death of the account holder. Sometimes, property is held in joint tenancy with rights of survivorship. With property held thus, the surviving joint owner will have the deceased owner’s property rights directly transferred to him or her.
Sometimes, property is held in a trust established by the deceased individual. In these instances, the property held in the trust will be distributed according to the terms of the trust. The death of the trust grantor will not necessarily be an automatic trigger on the distribution of trust funds. Instead, the trustee of the trust is tasked with administering the trust according to the terms set forth in the governing trust document.
In many cases, the assets of a deceased individual are passed through a will. These assets will go through probate. The personal representative of the estate is tasked with gathering and managing the assets of the estate. The personal representative is also tasked with notifying potential creditors of the estate and paying valid creditor claims from proceeds from the estate. After all valid creditor claims have been paid, the personal representative will distribute assets of the estate according to the terms set forth in the will. As previously stated, any property in the estate passes according to the state’s intestacy laws in the absence of a legally valid will.
Estate Planning Attorneys
As you can see, there are many ways that property may be transferred upon the death of an individual. With proper planning, you can avoid your property going through probate, which can be both lengthy and costly, after you die. This can be a huge benefit to your loved ones. Talk to the knowledgeable team at OC Wills & Trusts about your options. We can design an estate plan that protects the best interests of you and your loved ones. Contact us today.