How Can I Avoid Probate?
March 2, 2022 | View PDF
There seems to be a universal agreement that people want to avoid probate. When asked why Montanans say because of the probate fees. True, probate fees in the past were calculated on the value of the estate that passed through probate. If you had a million dollar piece of property the fee was based on that value. Now probate fees are to be “reasonable.” In other words how much time did it take the attorney to file the necessary papers to have the property transferred to the heirs, regardless if the person died with or without a will.
Are you still wondering if there is a way to avoid probate? The answer to this question thanks to the Montana legislature is yes! They have provided tools for Montanans to pass different types of property at death. By doing some things now, you can set up many of your financial assets to help your heirs avoid probate and save money in the process.
In Montana, various contractual arrangements are recognized, and these transfers take effect upon a person’s death. Some of these arrangements could be beneficiary designations on an insurance policy and pensions plan, along with many others.
With a Payable on Death (POD) designation, you are able to name the beneficiary of your checking, savings, and other accounts. With the POD, you still keep control of your money during your lifetime. The beneficiary of these accounts does not have ownership over these accounts until you die then; the balance of these accounts passes to the POD beneficiary. If you decide you want to change your POD beneficiary, you can fill out a new form with your bank or credit union. Your POD form should also be reviewed periodically and updated as circumstances change (birth, marriage, death, etc.).
A Transfer on Death Registration (TOD) is similar to POD. However, it is used to designate beneficiaries of stocks, mutual funds, and bonds. The TOD beneficiary does not have ownership rights over your funds while you are alive. Upon your death, these securities are transferred to your designated beneficiary. You can also change who your beneficiary is by filling out a new form. Upon your death, the beneficiary of these accounts has the option keeping, or selling them.
Both the POD and TOD are ways to transfer accounts or funds to a beneficiary without going through the probate process. Even though probate can be avoided with these contractual arrangements, the assets passed to beneficiaries are still subject to creditors claims against the deceased’s estate. Planning ahead can help your heirs avoid the probate process helping save the estate money.
To get the “Non-Probate Transfers” and “Designating Beneficiaries through Contractual Arrangements” MontGuide and other estate planning MontGuides, contact Carrie Krug at the MSU Extension Richland County office at 406-433-1206 or find them online here https://www.montana.edu/estateplanning/eppublications.html.