Nonprobate Property - Will Substitutes

Question 1

General - Will Substitutes

Answer 1

Include life insurance, joint tenancies or tenancies by entirety, inter vivos trusts, bank account trusts, deeds, contracts, and inter vivos gifts, including gifts causa mortis.

Will substitutes may enable individuals to avoid taxes and eliminate the costs and inconvenience of probate.

Property governed by a probate avoidance technique does not pass through probate and thus is not governed by the testator’s will or by intestacy. These assets must be removed from the decedent’s estate before distributing property under a will or via intestacy.

Question 2

Inter vivos Outright Gifts

Answer 2

If the D has already given the property away, it will not pass under the decedent’s will or by intestacy.

Question 3

Inter Vivos “Living” Trusts

Answer 3

Property the decedent has already transferred into an inter vivos trust will not pass through the decedent’s estate. Instead, it passes under the terms of the trust.

Question 4

Future Interests

Answer 4

Future interests, such as a remainder or executory interest, pass to the named beneficiary.

Question 5

Co-Ownership of Property

Answer 5

Tenancy in Common - No survivorship Rights; shares pass through estate

Joint Tenancy - Survivorship Rights; shares pass to surviving joint tenant.

Question 6

Life Insurance

Answer 6

Life insurance is the most widely used will substitute, it is a contract and the disposition of the policy’s proceeds is governed by the terms of the contract.

Question 7

Deeds

Answer 7

A deed deposited in escrow, with delivery conditioned upon the grantor’s death, may be a valid non-testamentary transfer. Similarly, if a deed, which by its terms is effective only upon the grantor’s death, has actually been delivered to the grantee, a court may sustain the transfer as non-testamentary by construing the deed as a present transfer of a future interest, subject to a life estate in the grantor.