Probate is the process of paying a deceased person’s bills and transferring ownership of that deceased person’s property pursuant to the person’s will or Ohio law as overseen by the local probate court.
Many people have been told that probate is worse than the devil (or in my case, worse than the University of Michigan). However, avoiding probate has fewer negative attributes now than it has ever had. The improvement of the probate process comes from some simplification of the federal estate tax calculation formulas and administrative efficiencies implemented by our local probate judges.
Often, people are encouraged to use trusts to avoid probate. However, a trust is only one of several tools that allow assets to transfer to other people on death without going through probate.
In general, it is easiest to organize the transfer of ownership of your assets to your loved ones upon your death on an asset-by-asset basis, categorizing each asset as probate or non-probate.
In simplest terms, assets that are subject to a specific contract that says how those assets’ ownership is to automatically transfer upon death, can most often transfer without probate. For example, proceeds from life insurance are usually not required to be administered through probate.
Similarly, savings, checking, money market and most investment accounts that are set up as “payable on death” are automatically liquidated and paid to beneficiaries (often called “payees” or “transferees”) upon proof of death being provided to the account manager.
Likewise, title to real estate that is owned by two or more people jointly with rights of survivorship will transfer to the living co-owners without probate upon one co-owner’s death. Notably, just because a person co-owns real estate or if a deed includes some basic language like “survivorship” somewhere on the deed, rights of survivorship require that certain specific words be included in the text of the grant of ownership in the deed.
People can also have their real estate transfer to someone else automatically at death by using life estates, life leases or transfer on death affidavits. For real estate subject to these tools and real estate that is in survivorship, ownership technically changes the moment the owner dies. However, the public record reflects the changed ownership only when an affidavit and original death certificate are filed at the courthouse.
Importantly, motor vehicles with a total value of less than $65,000 can be automatically transferred to a surviving spouse of a deceased person if the surviving spouse submits a certain affidavit to the Bureau of Motor Vehicles.
Like bank accounts that are “payable on death,” ownership of motor vehicles can “transfer on death” to another person, if that designation is literally printed on the certificate of title by the government office issuing the certificate of title.
Therefore, when clients approach an attorney upon the death of a loved one, one of the attorney’s first tasks is to identify everything that the deceased person owned at the time of death and then to classify each individual asset as probate or non-probate.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.