Avoiding Probate: A Comfortable Couple in Their 60s

For many couples, only some simple probate-avoidance techniques are necessary at this stage of life.

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Linda and Tomas are a couple in their early 60s with what they think of as a comfortable but far from lavish lifestyle. They bought their home in a California suburb 25 years ago, and it has gone up in value far beyond what they ever expected. They've also managed to amass some savings, which they are depleting to help their two children through college and graduate school. Linda and Tomas have also contributed to company-sponsored retirement plans for many years.

They've never thought much about estate planning. But recently a friend near their age contracted a serious disease, and it got them thinking: Why not take some simple steps that will make things easier on the survivor when one of them eventually dies?

The house. Checking their deed, they find that it lists them as owners of their house "as husband and wife." A little investigating reveals that this wording means that title to the house is held as community property. A little more research, and they learn that in California, they can hold the house "in community property with right of survivorship," giving the survivor automatic ownership of the house. They decide to sign and record a new deed, changing the way they hold title. Later, after one spouse dies, the survivor will be able to create a simple probate-avoidance trust and transfer the house to it. A more cautious couple, concerned about the possibility of simultaneous death, might go ahead and make a trust now, but Linda and Tomas just don't want to bother.

The savings. Linda and Tomas hold their bank and securities accounts in joint tenancy. That means that they don't need to worry about probate when the first spouse dies. Still, they decide to convert the accounts to payable-on-death accounts, so that they can name their son and daughter to inherit after both of them have died. It's easy and doesn't cost anything, and would take effect if they both died at the same time in an accident.

The retirement accounts. Linda and Tomas have already named each other as the primary beneficiary of their retirement accounts. As alternate beneficiaries, they named their children.

Their cars. Linda and Tomas expect to outlive their current vehicles by many years. But after learning that California allows transfer-on-death car registration, they decide to register their next car that way. It's free and simple; all they do is specify the transfer-on-death owner when they register the car.

The leftovers. Linda and Tomas both write simple wills, leaving each other their other items of property. Later, if they amass lots more property, they may make a simple probate-avoidance trust. Because California has a simple small estate procedure, which currently covers estates of less than $150,000, they may decide they don't need a living trust.

Linda and Tomas's Probate-Avoidance Plan

Asset

Plan

House

Hold as community property with right of survivorship, so it will automatically go to the survivor at the first spouse's death.

Bank accounts

Keep in joint tenancy; also name payable-on-death beneficiaries to inherit the funds after both parents have died.

Retirement accounts

No action needed; both Linda and Tomas have already named each other as beneficiaries, on a form provided by the plan administrators.

Cars

Register in transfer-on-death form.

Everything else (household belongings)

Leave to each other, with children as alternates, by will. (May not avoid probate; depends on value at the time of death.)



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