As readers of this blog know, probate can be costly, time consuming and stressful for our surviving family. However, our state does allow you to avoid it in your estate plan.
One such way that Tennessee residents can avoid probate is through a living trust. These legal entities allow you to transfer your property into a trust while you are alive, manage these assets yourself as the trustee (or have someone else management them for your benefit) and then have those assets go to your beneficiaries after you pass. Since those assets are in the name of your trust, they do not have to go through probate.
If you own something jointly, with the right of survivorship, when one owner dies, the dying person’s share automatically transfers to the surviving owner outside of probate. This type of joint ownership can be used in real estate, vehicles, etc.
In Tennessee, it will need to be registered as a joint tenancy with right of survivorship or as a tenants by the entirety, if you are married. And, make sure that both owners are equal owners.
Payable-on-death designations are yet another way to avoid probate. PODs name a beneficiary who will inherit an account, like a bank account, certificates of deposit, life insurance, annuities, etc. upon your death. You retain full control over the account while you are alive, but upon your death, your POD designee automatically receives your account proceeds without going through probate.
Transfer-on-death registration is similar to a POD, except it transfers securities, such as stocks and bonds, without going through probate. Like a POD, a TOD registration allows you to retain full control over your investments while you are alive, but upon your death, it transfers those investments to your TOD designee. This can be done by the form provided by your brokerage.
You already know that probate will be a costly hassle for your family in the future. But, you can avoid it by planning around it now. And, you can keep more money in your estate for your heirs too.