After a person passes away, their investment accounts will be pass on to the people or entities that they designate as their beneficiaries. There are three main ways to transfer investment accounts to beneficiaries after passing away: probate, transfer on death registration, and trust accounts. 

Probate is the court proceeding where a will is verified, and an estate is administered according to the terms of the will. Probate is also used where no will exists, in which case an estate will be administered under the terms of the state laws where the person resided. The process includes the collection of assets, the liquidation of liabilities, the payment of taxes, and the distribution of property to heirs.

While probate proceedings differ depending on the state, in most cases, probate will last between 6 – 12 months. Further, if assets must go through probate, an estate will incur attorney and court fees—adding more stress to your heirs’ already hectic lives.

For your investment and retirement accounts to avoid probate, you must designate beneficiaries so that the funds will pass to the beneficiaries without probate.

How to Avoid Probate When Transferring Assets

When initially setting up an investment account, you can add a Transfer on Death account (“TOD”) or a trust account. Both of these documents allow you to designate beneficiaries so that your accounts transfer to your beneficiaries after you pass away. 

The designation forms within these documents allow you to assign primary and contingent beneficiaries. In most cases, your bank or financial institution will let you designate beneficiaries online or through an in-person application.   

Another way to pass on your assets to your beneficiaries while avoiding probate is trust accounts. When setting up a trust, you must appoint a trustee to manage the account. a trustee is responsible for the disposition of assets in a trust. This includes overseeing the day-to-day management of property and assets within a trust.

If you are the sole owner of a TOD account, then you will likely assign beneficiaries with an asset percentage amount. However, if you have a joint investment account, then both account holders must die before the funds transfer to the beneficiaries. 

Contact our DC Attorneys for More Information

For more information on how do your investments transfer after you die, contact us at 202-803-5676. You can also directly schedule a consultation with one of our skilled attorneys. Additionally, for general information regarding probate law, check out our blog.