One way to allow specific assets to pass directly to your intended beneficiaries after you pass away without going through probate is to establish joint ownership if you don’t already own an asset jointly. This is particularly crucial when someone is widowed, divorced or otherwise unmarried.
Generally, if two people are listed as owners of an asset, that asset will become the surviving owner’s after the other one passes away. There are a couple of potential issues with this.
How you title an asset depends on whether you want the other person to have joint access
First, you may not want the person to whom you intend to leave an asset, like a home, boat or financial account, to be a co-owner with the right to sell it (or in the case of an account, to withdraw funds) while you’re still around.
In that case, you may want to set it up so that the intended beneficiary has a right of ownership only when you pass away. This can be done through a payable-on-death (POD), transfer-on-death (TOD) or other designation.
Using a joint tenancy with right of survivorship (JTWROS) designation will allow the other person to access the funds if you predecease them and let the asset avoid probate. This is often used with bank accounts. However, because they’re a joint tenant, they can also withdraw funds on their own unless you stipulate that both signatures are required.
Be sure your titling of assets is consistent with your estate plan
However you decide to title your assets so that they avoid probate and pass smoothly to your intended beneficiaries, it’s important to also reflect those wishes in your estate plan. This can help prevent confusion or misunderstanding of your wishes.
It is important to note that if your designation on an account differs from that in an estate plan document, the company that holds the asset (like a bank or other financial services provider) must abide by the designation on the account. They have no obligation to abide by an estate plan.
That’s one reason why it’s important to review your estate plan regularly and modify it as needed. Having legal guidance available as you create and modify your plan and make other estate-related decisions (like account ownership) can help you ensure that your wishes are clear and valid.