For many kinds of assets, it is possible to make arrangements which would cause the asset to pass directly to an intended beneficiary simply due to the death of the original owner. Assets which have been made subject to such arrangements are often referred to as “non-probate property,” since for planning purposes the transfers involved occur without the need for any probate or legal procedure or the involvement of a court or other legal authority. However, it is not the type of property but rather the presence of an effective transfer arrangement which distinguishes this type of asset. For that reason, we often prefer instead to refer directly to the transfer provisions themselves by using the term “Automatic Transfer Arrangements” (or “ATAs”) to refer to these arrangements.

The critical thing to understand about nonprobate transfer arrangements or “ATAs” is that as a general rule, they are essentially self-executing in the sense that if they are created properly, they will be carried out without regard to the provisions of the owner’s will, trust, or other estate planning documents. The estate planning process must therefore take these arrangements into account, and ensure that they will work in harmony with your other planning provisions in creating the overall outcome you intend. Non-probate or automatic transfer arrangements in general would include all of the following categories.

Types of Non-probate Transfers (or “Automatic Transfer Arrangements”):

  • Beneficiary designations such as those on life insurance and most retirement accounts are contractual obligations to pay a benefit or remaining balance directly to an intended recipient.
  • P.O.D. / T.O.D. (Payable on Death / Transfer on Death) directives, which are established by making appropriate changes to the records of ownership of the institution at which an owner holds an account like a bank or investment account. “P.O.D.” is more commonly used by banks, credit unions, and similar financial institutions, whereas “T.O.D.” is more often applied by firms holding brokerage or investment accounts, but they both work in essentially the same manner.
  • Rights of survivorship for assets held in a form of ownership which provides for such a right, such as joint tenancy or survivorship marital property. A right of survivorship means that the interest of any co-owner who passes away is transferred to the other co-owner(s) automatically simply due to the decedent’s death. The right is created by virtue of how co-owners hold title, so that is a detail that matters.
  • Will-substitute provisions under a Marital Property Agreement, according to which property of one or both spouses is to pass upon the spouse’s death directly according to the language of the agreement as a non-probate transfer. Among the various states, Wisconsin is unique in allowing this type of transfer to occur according to a Marital Property Agreement. Will-substitute terms in an MPA are also sometimes referred to as “Washington Will” provisions.

In some cases, our estate planning services may include assistance in creating or implementing beneficiary designations or other nonprobate transfer arrangements. Even if that is not the case, we are always available to provide help with them upon request.

To discuss your circumstances or needs, please feel free to schedule an initial consultation.