How to Distribute a Decedent's Assets to Beneficiaries
Transfer bank account funds., Find investment accounts., Look at the decedent’s real property deeds., Pass insurance type benefits to named beneficiaries., Be careful with IRAs, life insurance policies, and 401(k)s. Some property is distributed to...
Step-by-Step Guide
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Step 1: Transfer bank account funds.
One piece of property that can be distributed outside of probate is bank accounts.
If you are the administrator of an estate or trustee of a trust, you will need to know if bank accounts need to be included in your property inventory or if it was passed along in some other manner.
The manner in which a bank account is passed outside of probate will depend on how the account is titled and the type of paperwork the decedent filled out with the bank.
For example:
If the bank account is held jointly between the decedent and one or more other people, the survivors named on the account will receive the funds.
As an administrator, you can transfer the funds by simply providing the bank with a copy of the death certificate.
The decedent can name a payable on death (POD) beneficiary who will receive the funds upon the decedent's death.
The decedent does this by signing a beneficiary form with the bank.
To transfer the funds, you will need to provide the bank with a copy of the death certificate. -
Step 2: Find investment accounts.
Some investment accounts (e.g., mutual funds and brokerage accounts) can be designated as transfer on death (TOD) accounts, which means the funds in these accounts will be transferred to the named beneficiaries when the account holder passes away.
The decedent accomplishes this by signing a beneficiary form with the investment firm where the account is held.
To transfer the funds to beneficiaries, you will need to show the investment firm a copy of the death certificate., Real property (i.e., homes and land) can be passed to beneficiaries in various ways to avoid probate.
This is important because real property is often some of the most valuable property the decedent owns.
Passing it along outside of probate will help avoid tax liability and debt liability.
In most states, real property can be passed outside of probate in the following ways:
If title is held by both spouses as tenants by the entirety.
This designation will need to be included on the title document itself.
If it is, the property will automatically pass to the surviving spouse.
You will not need to do anything.
If title is held by both spouses as community property in Alaska with a right of survivorship.
If it is, the property will automatically pass to the surviving spouse and you will not be required to do anything.
If a trustee distributes the property through a trust.
If the decedent recorded a TOD deed.
A TOD deed, like a TOD investment account, names a beneficiary who will take title to the real property upon the decedent's death.
You will not need to do anything to effectuate this distribution either. , Like POD bank accounts, insurance, annuities, and retirement benefits will usually give the decedent the option of naming a beneficiary.
To pass the property to the POD beneficiaries, you will have to provide the account holder with a copy of the death certificate., The most common forms of interestingly distributed property include IRAs, life insurance policies, and 401(k)s.
Certain laws and bank policies will limit who can be named as a beneficiary and how the money can be distributed.
Check each policy carefully so you know exactly how it needs to be distributed.
For example, a 401(k) must name the decedent's spouse as their beneficiary unless the spouse signs a waiver.
If you need to distribute a 401(k), you need to make sure the spouse is the beneficiary or that you have a signed waiver.Distributions from an IRA will be determined by how old the decedent was and what the beneficiary wants to do with the account.
For example, if the beneficiary is the decedent's spouse and the decedent was under the age of 70 1/2, the spouse can choose to transfer the IRA into his or her own name, take periodic distributions, or take a lump sum distribution.Life insurance policies are interesting because of rules about making distributions to minors.
Most insurance providers will not make distributions to minors named as beneficiaries.
Instead, you will have to wait until the child reaches an adult age to make distributions or you will have to distribute the funds to a court appointed guardian., A lot of tangible personal property (e.g., furnishings, jewelry, artwork, tools, equipment) does not usually have a title associated with it.
If you encounter this property and it does not have a physical title, you can usually assume that it will automatically pass to the surviving spouse.
In these circumstances, it is assumed the surviving spouse held the property with the decedent as tenants by the entirety.
If this is the case in your state, there is no need to do anything.
The property will automatically be transferred upon death.
However, if the decedent did not have a spouse, the personal property will usually have to be probated unless it was transferred into a trust. -
Step 3: Look at the decedent’s real property deeds.
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Step 4: Pass insurance type benefits to named beneficiaries.
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Step 5: Be careful with IRAs
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Step 6: life insurance policies
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Step 7: and 401(k)s. Some property is distributed to beneficiaries with some quirks and special rules.
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Step 8: Assume spouses own certain pieces of personal property jointly.
Detailed Guide
One piece of property that can be distributed outside of probate is bank accounts.
If you are the administrator of an estate or trustee of a trust, you will need to know if bank accounts need to be included in your property inventory or if it was passed along in some other manner.
The manner in which a bank account is passed outside of probate will depend on how the account is titled and the type of paperwork the decedent filled out with the bank.
For example:
If the bank account is held jointly between the decedent and one or more other people, the survivors named on the account will receive the funds.
As an administrator, you can transfer the funds by simply providing the bank with a copy of the death certificate.
The decedent can name a payable on death (POD) beneficiary who will receive the funds upon the decedent's death.
The decedent does this by signing a beneficiary form with the bank.
To transfer the funds, you will need to provide the bank with a copy of the death certificate.
Some investment accounts (e.g., mutual funds and brokerage accounts) can be designated as transfer on death (TOD) accounts, which means the funds in these accounts will be transferred to the named beneficiaries when the account holder passes away.
The decedent accomplishes this by signing a beneficiary form with the investment firm where the account is held.
To transfer the funds to beneficiaries, you will need to show the investment firm a copy of the death certificate., Real property (i.e., homes and land) can be passed to beneficiaries in various ways to avoid probate.
This is important because real property is often some of the most valuable property the decedent owns.
Passing it along outside of probate will help avoid tax liability and debt liability.
In most states, real property can be passed outside of probate in the following ways:
If title is held by both spouses as tenants by the entirety.
This designation will need to be included on the title document itself.
If it is, the property will automatically pass to the surviving spouse.
You will not need to do anything.
If title is held by both spouses as community property in Alaska with a right of survivorship.
If it is, the property will automatically pass to the surviving spouse and you will not be required to do anything.
If a trustee distributes the property through a trust.
If the decedent recorded a TOD deed.
A TOD deed, like a TOD investment account, names a beneficiary who will take title to the real property upon the decedent's death.
You will not need to do anything to effectuate this distribution either. , Like POD bank accounts, insurance, annuities, and retirement benefits will usually give the decedent the option of naming a beneficiary.
To pass the property to the POD beneficiaries, you will have to provide the account holder with a copy of the death certificate., The most common forms of interestingly distributed property include IRAs, life insurance policies, and 401(k)s.
Certain laws and bank policies will limit who can be named as a beneficiary and how the money can be distributed.
Check each policy carefully so you know exactly how it needs to be distributed.
For example, a 401(k) must name the decedent's spouse as their beneficiary unless the spouse signs a waiver.
If you need to distribute a 401(k), you need to make sure the spouse is the beneficiary or that you have a signed waiver.Distributions from an IRA will be determined by how old the decedent was and what the beneficiary wants to do with the account.
For example, if the beneficiary is the decedent's spouse and the decedent was under the age of 70 1/2, the spouse can choose to transfer the IRA into his or her own name, take periodic distributions, or take a lump sum distribution.Life insurance policies are interesting because of rules about making distributions to minors.
Most insurance providers will not make distributions to minors named as beneficiaries.
Instead, you will have to wait until the child reaches an adult age to make distributions or you will have to distribute the funds to a court appointed guardian., A lot of tangible personal property (e.g., furnishings, jewelry, artwork, tools, equipment) does not usually have a title associated with it.
If you encounter this property and it does not have a physical title, you can usually assume that it will automatically pass to the surviving spouse.
In these circumstances, it is assumed the surviving spouse held the property with the decedent as tenants by the entirety.
If this is the case in your state, there is no need to do anything.
The property will automatically be transferred upon death.
However, if the decedent did not have a spouse, the personal property will usually have to be probated unless it was transferred into a trust.
About the Author
Amy Edwards
Enthusiastic about teaching practical skills techniques through clear, step-by-step guides.
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