How to Title Property to Avoid Formal Probate

After the death of the first spouse, formal court-supervised probate can often be avoided with careful planning that must occur prior to the death.

The key factor is carefully examining how each asset is owned and/or titled. Specific examples include:

Real Estate: Real estate titled in joint tenancy with rights of survivorship passes to the survivor by law. In Iowa, a one-page affidavit can be used. If the real estate is in an LLC, the Operating Agreement can provide for the transfer upon the owner's death.

Vehicles: Having the vehicles' titles as Husband or Wife as opposed to Husband and Wife.

Bank Accounts—Having them titled as Husband or Wife, as opposed to husband and wife. Alternatively, have the accounts set up with a designated beneficiary and confirm with the bank in writing that no formal probate proceedings will be required to make that transfer.

Investment Accounts—Same as bank accounts. Alternatively, they may be established as Pay on Death (POD). In that instance, the account is liquidated and the proceeds given to the named beneficiary. There is also an option of Transfer on Death (TOD). In that instance, the account itself with the particular investments are given to the named beneficiary.

Corporate or LLC Interests—These can be transferred pursuant to the By-Laws or Operating Agreement. Remember that technically the transfer is the shares or membership units because the entity itself owns the asset.

If you have a question about a particular asset, consult your legal counsel. Additionally, make sure any beneficiary designations, POD, TOD, and general ownership interests are in writing and that you maintain a copy of that document.

Additionally, keep in mind that there are notification requirements to the Department of Human Services. While you may avoid court-supervised probate, it is a good business practice to consult with legal counsel to make sure that these notification requirements are followed.

Finally, for estates of decedents where assets are under $25,000.00, those assets may be distributed by Affidavit after the appropriate waiting period.

NOTE: These are general guidelines. These do not replace consulting with your attorney, accountant, insurance professional and financial planner.