Understanding how the probate system works, the requirements for a valid will or trust, and when community property law applies is important, but persons who choose to draft their own transfer documents should be aware of other important considerations.  If you have bank accounts, investment accounts, a retirement account, an insurance policy, house, business, and other assets consideration should be given to how to transfer such assets to a spouse, children, grandchildren, or business partner upon your death.

Non-probate Options

Individuals can transfer assets and wealth without the transfer(s) being subject to the probate system.  The following is a list of options that can be used:

• Lifetime Gift – can be made of personal property and real property.  A personal gift can be made effective by the donor delivering the property to the donee with the intent to make a “present” gift.  If the gift is intended to take place only upon the donor’s death, the gift maybe classified as a testamentary gift and will automatically fail (as a will transfer) for not meeting the statutory requirements of wills.
• Joint Interests – are when to people own property and when one dies the surviving owner becomes the owner of the whole property.  Joint interests may avoid probate but not federal estate taxes – there is a difference between probate avoidance and tax avoidance.  For example, if a married couple owns property as Joint Interest they may want to adopt a will if they want to avoid taxes on property that passes to surviving owner.  Real property consists of land and buildings.  Personal property consists of bank accounts, stock, bonds, mutual funds, investment accounts, tangible property, household items not affixed to the building, and other similar items.
• Life Insurance – can be made payable to a pre-existing living trust which then manage the proceeds for the survivors.  Insurance can also be paid directly to beneficiaries or held by the trustees to be paid out over time.  Life insurance in a contract and therefore is likely to be enforced by courts under contract law rather than the law of wills.
• Retirement Funds – Employee Retirement Income Security Act (ERISA) preempts any and all state law related to most retirement plans.  ERISA may apply to problems that are owed as as or falls under wills and trust laws.  ERISA has its own stands of duty for trustees who administer pension plans.

Other important considerations

Guardianship – when an individual is a minor or unable to make certain decision for them-self the local law is available to allow for a guardian to make decisions.  Generally, the person must be incompetent before a court will appoint a guardian which means the person must not be able to under the question at hand, what their options are, and the consequences of particular decisions.  Guardianship can be based on the needs of the person, can be limited or partial, and can over a person or property.

Durable Power of Attorney – is issued pursuant to state law to enable a person to act on another person’s behalf.  The POA can be for a specific purpose or a variety of acts.  In most cases, financial institutions will not release funds to a person with a POA or be reluctant to release funds to a person if they fear the document has been revoked or any other reason.

Personal Representative is a person named to handle an estate.  With wills, the person named as the executor will be first choice; for trusts, a trust company or trust department of a firm or institution will serve as trustee; and if a person dies without a will, state law will direct how the property is to be distributed and provide a hierarchy from which to choose an administrator.