Probate & Trust Law Section Conference Manual ... - Minnesota CLE

2. Other “Non-Probate” Assets
Second, the ownership of an asset may be automatically transferred to one or more beneficiaries
by reason of the decedent’s death through one of several “non-probate” means. Like an asset
owned by a trust, these types of assets will be distributed to the decedent’s beneficiaries without
requiring probate proceedings. Unlike trust assets, however, these other “non-probate” assets do
not require a named trustee to collect and administer the assets as part of a trust administration.
Rather, as an attribute of this form of ownership, the asset can be automatically transferred to one
or more new owners without the necessity of a probate proceeding or trust administration. Other
non-probate assets generally include the following types of assets:
JTWROS Assets. Some types of assets are “jointly” owned between two or more co-owners as
“joint tenants with right of survivorship” (“JTWROS”). 7 As a legal attribute of this kind of
ownership, the ownership is automatically transferred to the surviving owner at the first death.
Two types of assets commonly owned as JTWROS are:
o Residence. A residence is commonly owned JTWROS between a husband and wife.
o Convenience Checking Accounts: A decedent may have opened a checking account
JTWROS to provide a family member with access to cash in order to pay expenses
during incapacity or following death.
Beneficiary Designation: A “beneficiary designation form” is a form completed by the decedent
during his or her lifetime that has the legal effect of transferring ownership on an asset
immediately upon the decedent’s death. The entity administering the asset has agreed to transfer
the decedent’s account(s) or assets to those persons designated on the form. So long as the
decedent had designed specific individuals as the beneficiaries, these types of assets can be
transferred without the need for a probate proceeding and can be considered “non-probate”
assets. Assets that often pass by a beneficiary designation at the death of the owner include:
o life insurance policies;
o annuities; and
o retirement accounts (such as Roth and Traditional IRAs, 401(k)s, and 403(b)s).
Transfer on Death/Payable on Death Designations. Certain bank accounts or investment
accounts may be transferred directly to one or more named beneficiaries through a “transfer on
death” (“TOD”) designation or a “payable on death” (“POD”) designation. Like a beneficiary
designation form for a life insurance policy or a retirement account, a TOD or POD is
accomplished through the completion of a form provided by the administrator of the account,
and allows the decedent to specify the new owner of the account following death.
7 Please refer to the Probate Avoidance materials to review the important distinction between “joint tenants with
right of survivorship” (“JTWROS”) and “tenants in common.”
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