New Jersey Lawyers: Hanlon Niemann serving Monmouth County

Avoiding Probate “101” A Basic Explanation of Probate

When an individual dies owning property solely in his or her name, without a beneficiary designation, a formal procedure (“probate”) is usually needed to determine to whom the property should pass. If there is a valid will, the property will pass according to its terms. If there is no will, the property will pass to the individual’s heirs at law. The intestacy laws of New Jersey will determine who the individual’s heirs are and what they receive.

However, it is possible to legally pass property to another person without going through probate. The following are examples of some probate avoidance devices. Keep in mind that although can be beneficial to avoid probate, because of its costs and time requirements, these devices have pitfalls. Additionally, probate is sometimes the best option depending on the situation. The following are examples of probate avoidance devices:

Joint Tenancy - Adding another person to your assets as a joint owner or “joint tenant with rights of survivorship” will allow your property to pass to the other individual upon your death without the need for a probate proceeding. The obvious pitfall to this is that while you are alive the other owner has access to 100% of that asset and the asset is subject to any claims of the co-owner and/or creditor of the co-owner.
Beneficiary Designations - Adding a Transfer on Death (TOD) Beneficiary to your motor vehicle; Pay on Death beneficiaries (POD) on bank accounts; Transfer on Death Deeds (survivorship Deeds) to real estate: Unlike joint tenancy, adding beneficiary designations to your property allows you to name an individual to inherit your property at your death without giving them any current ownership. The property will pass to the individual of your choice without going through a probate proceeding. One of the problems associated with beneficiary designations is that often times, the estate is not divided equally among the family as was intended by the individual.
A Revocable Living Trust - Revocable trusts are documents wherein an individual “Grantor” creates a trust instrument and names an individual (usually themselves) or a bank “Trustee.” The Grantor then transfers property into the trust and the Trustee manages the property and distributes the property according to the terms of the trust. Unlike the addition of joint tenants or beneficiaries on your accounts, which may lead to conflict among family members, a Revocable Living Trust allows you to specify how you wish your property to pass. A Revocable Living Trust also avoids some of the adverse tax consequences associated with joint titling and beneficiary designations, while accomplishing the same goal of avoiding probate.

Other considerations: Last Will and Testament: It is VERY important to understand that if you have beneficiaries listed on your assets, upon your death your assets will be distributed to those beneficiaries you have listed. They WILL NOT be distributed according to your Last Will and Testament.

Incompetency: What happens if an individual is incompetent If you have a well drafted power of attorney in place that specifically states you can create a trust or add/change a beneficiary on the individuals account, you may do so. Keep in mind, the power of attorney has a fiduciary duty to act in the principal’s best interest, which includes following their testamentary wishes.

Spousal Elective Share: If you are married, before titling/adding beneficiaries to your assets, you need to take into account your husband or wife’s spousal elective share (the amount they are entitled to inherit from you by law). Additionally, if you or your spouse are applying for/receiving Medicaid, will likely consider the applicant’s/recipient’s failure to receive the spousal elective share as a transfer of assets which will disqualify your spouse for benefits.

If you have any questions about the contents of this article, please call Fredrick P. Niemann personally at 732-863-9900 or e-mail him at fniemann@hnlawfirm.com.

The above information is general. Before taking action to avoid probate, you should consult an estate planning attorney who can examine your specific situation and advise you accordingly.

The information contained in the Hanlon Niemann, P.C. ("HN" or the "firm") website is provided for informational purposes only, and should not be construed as legal advice or an offer to perform services on any subject matter. The content of this website contains general information and may not reflect current legal developments, verdicts or settlements. Recipients of contents from this site, clients or otherwise, should not act or refrain from acting on the basis of any content included in the site without seeking appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. HN expressly disclaims all liability with respect to actions taken or not taken based on any or all of the information or other contents of this site. Any information sent to HN via Internet e-mail or through the HN website is not secure and is done so on a non-confidential basis. The transmission of the HN site in part or in whole, and/or communication with HN via Internet e-mail through this site does not constitute or create an attorney-client relationship between HN and any recipients. The firm does not endorse, and is not responsible for, any third-party content that may be accessed through this website. Nothing herein is intended to create an attorney-client relationship and shall not be construed as legal advice. This is not an offer to represent you, nor is it intended to create an attorney-client relationship. The content of any e-mail sent to HN, or any of its attorneys at the e-mail addresses set forth in this website will not create an attorney-client relationship and will not be treated as confidential.

Copyright © 2007 Hanlon Niemann, P.C.. All rights reserved. All materials presented on this site are copyrighted and owned by Hanlon Niemann, P.C., or other individuals or entities as designated. Any republication, retransmission, reproduction, downloading, storing or distribution of all or part of any materials found on this site is expressly prohibited.

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This material may contain technical or typographical errors. HN does not guarantee its accuracy or completeness or suitability. IN NO EVENT SHALL HN BE LIABLE FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS MATERIAL, FOR ANY USE OF THIS WEBSITE, OR FOR ANY OTHER HYPERLINKED WEBSITE. HN takes no responsibility and makes no warranty whatever for the content or information contained on sites linked to or from this site. All such links are provided on this website solely for the convenience of users and do not represent any endorsement, advertisement or sponsorship of linked sites or any products or services offered.


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		Avoiding Probate “101” A Basic Explanation of Probate Avoiding Probate “101” A Basic Explanation of Probate When an individual dies owning property solely in his or her name, without a beneficiary designation, a formal procedure (“probate”) is usually needed to determine to whom the property should pass. If there is a valid will, the property will pass according to its terms. If there is no will, the property will pass to the individual’s heirs at law. The intestacy laws of New Jersey will determine who the individual’s heirs are and what they receive. However, it is possible to legally pass property to another person without going through probate. The following are examples of some probate avoidance devices. Keep in mind that although can be beneficial to avoid probate, because of its costs and time requirements, these devices have pitfalls. Additionally, probate is sometimes the best option depending on the situation. The following are examples of probate avoidance devices: Joint Tenancy - Adding another person to your assets as a joint owner or “joint tenant with rights of survivorship” will allow your property to pass to the other individual upon your death without the need for a probate proceeding. The obvious pitfall to this is that while you are alive the other owner has access to 100% of that asset and the asset is subject to any claims of the co-owner and/or creditor of the co-owner. Beneficiary Designations - Adding a Transfer on Death (TOD) Beneficiary to your motor vehicle; Pay on Death beneficiaries (POD) on bank accounts; Transfer on Death Deeds (survivorship Deeds) to real estate: Unlike joint tenancy, adding beneficiary designations to your property allows you to name an individual to inherit your property at your death without giving them any current ownership. The property will pass to the individual of your choice without going through a probate proceeding. One of the problems associated with beneficiary designations is that often times, the estate is not divided equally among the family as was intended by the individual. A Revocable Living Trust - Revocable trusts are documents wherein an individual “Grantor” creates a trust instrument and names an individual (usually themselves) or a bank “Trustee.” The Grantor then transfers property into the trust and the Trustee manages the property and distributes the property according to the terms of the trust. Unlike the addition of joint tenants or beneficiaries on your accounts, which may lead to conflict among family members, a Revocable Living Trust allows you to specify how you wish your property to pass. A Revocable Living Trust also avoids some of the adverse tax consequences associated with joint titling and beneficiary designations, while accomplishing the same goal of avoiding probate. Other considerations: Last Will and Testament: It is VERY important to understand that if you have beneficiaries listed on your assets, upon your death your assets will be distributed to those beneficiaries you have listed. They WILL NOT be distributed according to your Last Will and Testament. Incompetency: What happens if an individual is incompetent If you have a well drafted power of attorney in place that specifically states you can create a trust or add/change a beneficiary on the individuals account, you may do so. Keep in mind, the power of attorney has a fiduciary duty to act in the principal’s best interest, which includes following their testamentary wishes. Spousal Elective Share: If you are married, before titling/adding beneficiaries to your assets, you need to take into account your husband or wife’s spousal elective share (the amount they are entitled to inherit from you by law). Additionally, if you or your spouse are applying for/receiving Medicaid, will likely consider the applicant’s/recipient’s failure to receive the spousal elective share as a transfer of assets which will disqualify your spouse for benefits. If you have any questions about the contents of this article, please call Fredrick P. Niemann personally at 732-863-9900 or e-mail him at fniemann@hnlawfirm.com. The above information is general. Before taking action to avoid probate, you should consult an estate planning attorney who can examine your specific situation and advise you accordingly. The information contained in the Hanlon Niemann, P.C. ("HN" or the "firm") website is provided for informational purposes only, and should not be construed as legal advice or an offer to perform services on any subject matter. The content of this website contains general information and may not reflect current legal developments, verdicts or settlements. Recipients of contents from this site, clients or otherwise, should not act or refrain from acting on the basis of any content included in the site without seeking appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. HN expressly disclaims all liability with respect to actions taken or not taken based on any or all of the information or other contents of this site. Any information sent to HN via Internet e-mail or through the HN website is not secure and is done so on a non-confidential basis. The transmission of the HN site in part or in whole, and/or communication with HN via Internet e-mail through this site does not constitute or create an attorney-client relationship between HN and any recipients. The firm does not endorse, and is not responsible for, any third-party content that may be accessed through this website. Nothing herein is intended to create an attorney-client relationship and shall not be construed as legal advice. This is not an offer to represent you, nor is it intended to create an attorney-client relationship. The content of any e-mail sent to HN, or any of its attorneys at the e-mail addresses set forth in this website will not create an attorney-client relationship and will not be treated as confidential. Copyright © 2007 Hanlon Niemann, P.C.. All rights reserved. All materials presented on this site are copyrighted and owned by Hanlon Niemann, P.C., or other individuals or entities as designated. Any republication, retransmission, reproduction, downloading, storing or distribution of all or part of any materials found on this site is expressly prohibited. NO REPRESENTATIONS This material may contain technical or typographical errors. HN does not guarantee its accuracy or completeness or suitability. IN NO EVENT SHALL HN BE LIABLE FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS MATERIAL, FOR ANY USE OF THIS WEBSITE, OR FOR ANY OTHER HYPERLINKED WEBSITE. HN takes no responsibility and makes no warranty whatever for the content or information contained on sites linked to or from this site. All such links are provided on this website solely for the convenience of users and do not represent any endorsement, advertisement or sponsorship of linked sites or any products or services offered.

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