provided by: 
In addition to joint tenancy, other ways for avoiding probate during estate planning includes establishing a savings account trust, opening a payable-on-death bank account and adding a transfer-on-death designation to any securities you own. Assets in these accounts will pass automatically to the person you designate as beneficiary without the need for probate. Life insurance policies also may play a role in avoiding probate.
- What is a "payable-on-death" account?
- What is a "savings account trust"?
- What is a "transfer-on-death" designation?
- Life insurance policies
What is a "payable-on-death" account?
If your state permits payable-on-death accounts, there really are no risks involved. All you have to do is designate, on the form provided by the bank, the person(s) you want to receive any money in the account (savings, checking, or certificate of deposit) after you die. Your beneficiary can claim the money simply by giving the bank a copy of the death certificate and personal identification.
What is a "savings account trust"?
These are also known as "Totten Trusts" (the name comes from the legal case that validated this device). All you have to do is open a bank account in your name "as trustee" for someone else. In fact, there is really no trust relationship established. Rather the account functions like a "payable-on-death" (POD) account.
During your lifetime you are permitted to withdraw the funds at any time for your own use. The "beneficiary" you name on the account has no rights to any of the funds while you are alive, but automatically gets whatever is left in the account when you die. Because the beneficiary has no ability to withdraw funds during your lifetime, you will not be treated as having made a taxable gift.
Some states will not permit you to open a straight out payable-on-death bank account, but will allow you to accomplish exactly the same result through the use of a Totten savings account trust.
What is a "transfer-on-death" designation?
This is a method of avoiding probate on stocks and bonds. In most states you can simply add a transfer-on-death designation to the individual securities or to the security account. When you die, the securities will pass without the need for probate to the person you designated.
Life insurance policies
"My father had a $25,000 life insurance policy that named me as the beneficiary. But his will left everything, including the proceeds of this life insurance policy, to my sister. Who gets the $25,000?"
Copyright © GotTrouble.com, Inc. All rights reserved.
Click here to read rest of the article