Understanding Basic Asset Transfers - Avoiding Probate Without a Trust

When someone dies, every asset they own, whether that is real estate, a vehicle, bank account, or investment account, must end up with a new living owner.

The way an asset is titled determines how that transfer happens.

Understanding how assets transfer at death is the foundation of smart estate planning. The sections below walk you through the most common methods. The best part? Most of them let your property pass directly to your loved ones while skipping probate entirely. No expensive revocable trust needed.

Jointly Held Assets

One of the easiest and most common ways to transfer an asset after death is to hold the asset in joint ownership.

When an asset is held jointly:

• Two or more people are co-owners.

• Each owner has an equal, undivided interest in the entire asset (meaning no one owns a specific “piece”, everyone owns 100% together).

• When one of the joint owners dies, their interest vanishes automatically in favor of the surviving owner(s).

The most common examples of jointly held assets are:

• Real estate owned by a married couple as “joint tenants”

• Joint bank accounts (joint checking, savings, CDs, etc.)

While some minor paperwork is usually required after death to remove the deceased individual from the title, the asset itself never enters the probate estate (because it never lacks a surviving owner!). 

When one surviving owner is left, the asset becomes an individually held asset.

Individually Held Assets

The simplest form of ownership is when an asset is titled solely in one person’s name.

In estate planning, individually owned assets demand the most attention because they are the most likely to require probate. In general, probate is required any time an asset lacks either:

1. a surviving owner; or 

2. another built-in transfer mechanism. 

When the sole owner of an asset dies, the court-supervised probate process will be needed to transfer that asset to the deceased person’s heirs or beneficiaries.

Avoiding probate starts with addressing how individually owned assets are designated to pass at death. The three most common ways are described below.

Beneficiary Designation

The most widely used probate-avoidance tool. The owner names one or more beneficiaries who will receive the asset directly upon the owner’s death.

Is only possible for assets that are held by a third party custodian (e.g. bank, insurance company, financial institution, etc.).

At death, the custodian follows the owner’s beneficiary instructions and simply transfers the asset to the named beneficiary, usually within days or weeks and with no court involvement.

Small Estate Transfers

Many states allow a streamlined process when the deceased person’s individually owned, non-real-estate assets total less than a certain threshold (in Minnesota the threshold is $75,000 or less).

Instead of opening a full probate case, the executor or heirs file a simple “small estate affidavit” with banks, brokerages, and other institutions. Once the affidavit is accepted, those institutions release the assets directly to the heirs, usually within weeks and without court supervision.

Transfer on Death Deed

A transfer on death deed (sometimes called a TODD or a beneficiary deed) lets a real estate owner name beneficiaries who will automatically receive the property at death.

The deed is signed and recorded with the county recorder while the owner is alive. Nothing changes during life and the owner retains full control.

After death, the beneficiaries supply the death certificate to the county recorder, and title to the property passes directly to them without probate.

Conclusion

Understanding the way your assets will transfer at death is the key to understanding your estate plan. Joint accounts, beneficiary forms, small estate affidavits, and transfer-on-death deeds all let you transfer property straight to the people you love. Avoiding the mess of probate court and avoiding the need to establish and fund a revocable trust.

Take a few minutes to check how your accounts and property are titled. A couple of easy updates now can save your family a lot of time and money, and hassle later. 

Ready to make sure everything is set up right? Schedule a free estate plan review with Jacobson Estate Law today. We’ll walk through your situation and handle the details for you.