Methods Of Property Transfer At Death
Estate planning involves transfer of ownership at life and death. This section will focus on the transfer at death. There are four primary ways to transfer property ownership at death.

1) Transfers through the probate process (provisions in your will)
2) Transfers by operation of law
3) Transfers through trusts
4) Transfers by contract

1. Transfers Through Probate Process
Most people know that the probate process can be costly, time consuming and contend that it provides little or no benefit. And most proponents of the probate process argue that it prevents fraud in transferring ownership and protects inheritors from claims against the decedent's property.

The probate process consists of:
· Filing a will with the local probate or surrogate court
· Taking inventory of the decedent's property
· Pay off debts and/or creditors if any (including any estate tax owed)
· Distributing the property at the direction of the will

The reality is the probate functions are administrative and clerical. It is also important to know that all property the decedent owned, or had an interest in, may not pass through his or her will. Only probate assets pass through wills.

Assets subject to probate include: · Singly owned assets
· Contracted proceeds which are payable to the estate
· Property held by tenancy in common
·
Assets where the beneficiary is "estate of the insured"
· Community property (50% attributable to each spouse)

Non-probate assets include everything else.

Please see below "Intestate Succession" for decedents with no will, but keep in mind the estate must still go through probate.

Testamentary Distribution
Testamentary distribution is the process in which the decedent leaves an outright bequest of personal property or real property through a will. The three types of bequests are:

· Specific bequest – A specific bequest is when you leave a specific individual or organization a specific item or certain dollar amount and describe the source. An example would be: "I leave my Harley Davidson to my grandson, Heath."
· General bequest – A general bequest is not specific in nature and gives the executor flexibility to honor the bequest. An example would be "I leave $30,000 to my daughter, Julie."
· Residuary bequest – A residuary bequest is made after all other bequests have been made and all debts paid to creditors. An example might be "I leave the remainder of my personal and real assets to the Animal Kingdom Sanctuary."

Intestate Succession
Although most people should think ahead and create a will in order to ensure that, after their death, their wishes are carried out. Not everyone makes full preparations for what will happen to their property when they die. A person who dies without a will is said to have died "intestate." If a person dies in intestate, state law may dictate how the property is distributed.

Intestacy laws vary from state to state and a person's property is distributed according to the laws of the state in which he or she died. However, if the person owned property in a different state, the property may be distributed according to that state's laws instead. Please note that each state has its own laws on who inherits property in the absence of a will.

Operation of Law, Transfers Through Trusts, Transfers by Contract

Related Articles
  1. Retirement

    Tips to Reduce or Avoid Probate on Your Estate

    Avoid or reduce the delays and costs of probate for your estate with these tips.
  2. Retirement

    Which Estate Transfer Technique is Right for You?

    This article explains the difference between the two estate transfer methods -- a will and a trust, and the circumstances under which each can be used.
  3. Retirement

    Estate Planning for Beginners, Part One

    Where do you start with estate planning? Here's a helpful outline to make sure your assets go where you want them to in the event of your death.
  4. Retirement

    3 Secrets You Didn't Know About Estate Planning

    Three estate planning secrets every advisor and saver needs to know.
  5. Retirement

    Avoid These 4 Common Causes of Family Estate Fights

    Sibling battles over their parents' belongings are quite common. But open family discussions before the parent dies can often prevent them.
  6. Financial Advisor

    Leaving Inheritance To Children Easier Said Than Done

    Consider your own retirement needs when deciding whether to leave an inheritance.
  7. Retirement

    A Revocable Living Trust Makes an Executor’s Job Easier

    Establish a revocable living trust to give you peace of mind and avoid probate. The executor of your will’s job will be easier, too.
  8. Retirement

    Why Your Estate Shouldn't Be Your IRA Beneficiary

    Here are five reasons why you should not name your estate as your IRA beneficiary.
Frequently Asked Questions
  1. What is the history of the S&P 500?

    Discover the history of the S&P 500, which sophisticated market participants consider to be the best index to understand ...
  2. What is the formula for calculating weighted average cost of capital (WACC) in Excel?

    Learn about the weighted average cost of capital (WACC) formula and how it is used to estimate the average cost of raising ...
  3. Where do most fund managers get their market information?

    Many fund managers, whether they manage a mutual fund, trust fund, pension or hedge fund, have access to resources that the ...
  4. What's the difference between short-term investments and marketable securities?

    Understand the difference between short-term investments and marketable equity securities, and learn the importance of short-term ...
Trading Center