Bay Area Estate Planning Lawyers: How to Avoid Probate with Joint Accounts and Beneficiaries

There are several strategies available that Bay Area estate planning lawyers use to help seniors and their families avoid lengthy and costly probate proceedings, including adding other people as joint owners on their accounts or making beneficiary designations on accounts and policies. However, these strategies should only be done under the supervision of an experienced estate planning lawyer since there can be many unforeseen risks of such actions.

What is Joint Ownership?

In regards to probate, there are two types of ownership: sole and joint. Solely-held property must go through the probate process since it can’t legally be claimed by someone without a court order. Jointly-held property, on the other hand, does not have to go through probate because the joint owner of the account has full ownership if the other owner dies. While this seems simple enough, many experienced probate attorneys stress to their clients that once a joint owner is named to an account, that account is now the legal property of that person; in other words, that person can spend money out of the account as he or she sees fit. Additionally, the account is also fair game for creditors, as they will not see the distinction of who actually put money in the joint account. Also, keep in mind that when a joint owner passes away, the account will then be solely-held—and subject to probate—until another joint owner is added to the account.

How Do Beneficiary Designations Work?

Beneficiary designations on financial accounts and insurance policies are a way to make sure that those accounts pass to heirs without going through the probate process. However, it’s not always a fool-proof strategy. For example, if a senior makes a minor the beneficiary to a financial account and then passes away, the minor cannot receive the assets free and clear. Instead, an adult guardian must manage the distributions. If a guardian is not named by the senior before passing, the probate court will appoint someone who, in some cases, may not be the person that senior would want handling their finances. Again, if the beneficiary passes away before the senior, a new beneficiary will have to be named for the account or policy to avoid probate. This is not always possible depending on the medical state of the senior, so there is a good chance the assets must be administered through probate proceedings.

If you want more information about probate, or you want to have your current estate plan examined to make sure you can avoid probate, please contact our Bay Area estate planning lawyers at (650) 422-3313 to set up a consultation.