The Virginia courts oversee estate administration. The assets of those most people who die without an estate plan in place have their assets pass through probate court. Additionally, anyone who owns real property or significant assets solely in their own name that are not safeguarded by a trust or other specialized arrangements will have their estate pass through probate.
During probate, the courts will look into the assets in someone’s estate, the terms of their estate planning paperwork and other matters, such as debts that they owed when they died. Assets that pass through probate court can sometimes put the estate at risk of incurring significant taxes. The assets themselves may then be at risk of liquidation to repay creditor claims or cover those tax obligations.
Financial accounts could be among the first resources used to cover financial obligations after someone dies. That reality could affect the inheritance of someone who is important to a testator. People could also fight over those assets if they go through court. Many people would prefer to keep their resources out of probate court if possible as a result of these potential challenges.
It is possible to transfer certain accounts without probate
Financial accounts are some of the resources that do not need to pass through probate court to transfer to a beneficiary after someone dies. The testator can file special transfer on death paperwork designating a specific person as the party who will assume the account after their passing. Such paperwork is kept on record with the financial institution managing the account.
After someone dies, the beneficiary will be able to assume control over the account without it passing through probate court. It will not become part of the testator’s estate if people follow the process correctly. Transfer-on-death designations are an effective means of choosing who will inherit an account without contributing significantly to the total value of the estate or putting the account at risk of credit or claims. Some people choose to transfer financial resources to a trust as a way of bypassing probate requirements for those resources. That is another valid option for those hoping to have a specific person inherit the full remaining balance of their account.
Learning more about what happens to personal property after death can help people put together effective estate plans in Virginia and minimize any assets that may otherwise be at risk during probate.