One of the main reasons for seeing an attorney about estate planning is to make sure that, when a loved one passes away, their assets don't have to go through probate. During the probate process, which takes place whenever someone dies without a will or trust that communicates their how they want their assets distributed, a probate court judge makes all those decisions. Sometimes, those decisions don't reflect what the deceased would have wanted.
There is, however, a way to protect some (but not all) of your assets from probate court without using a will or trust – by designating a beneficiary. To be clear, there are important assets that you cannot protect with a beneficiary designation, such as real estate or a business you own. In fact, only with proper estate planning can you determine in advance who will take care of your minor children, and who will manage your affairs if you are incapacitated, among other important things.
However, there are several asset types that can be completely protected by designating a beneficiary. In other words, upon death, these assets will transfer directly to the person you choose, such as your spouse or children. Beneficiaries are most commonly associated with life insurance policies, which work why are the policy Holder to name a beneficiary. Other such assets include:
Checking and savings accounts
Money market accounts
Certificates of deposit
Retirement accounts
401(k)s
Brokerage accounts (stocks, bonds, mutual funds, etc.)
Annuities
Structured settlements
For the most part, with any type of account you own that holds money or other assets with monetary value, you can designate a beneficiary.
A notable exception, however, is that many of the online, app-driven investment platforms, such as Robinhood and Cash App, do not allow you to name a beneficiary. This means if you pass away with money in that account, and it has not been specifically covered in a will or trust, it must go through probate and may take months or even years to resolve. This is also true of most cryptocurrency accounts like Bitcoin or Coinbase.
Of course, all of these circumstances can be covered by effective estate planning, giving you and your family the peace of mind that comes with knowing it’s resolved. If you would like to learn more about how to use a beneficiary designation, or if you would simply like to talk to a qualified estate planning attorney about how to protect your family in general, contact Nexus Legal Solutions at 407-900-7722 for a consultation.