Do Beneficiaries Have to Go Through Probate?
When a loved one dies, it’s a stressful time for any family. You’re grieving the loss of a loved one, and now you also have to deal with probate and managing their assets.
If your loved one took the time to make a good Relational Estate Plan® with an experienced estate planning attorney, you may be able to avoid much of the stress and confusion that comes with handling probate. And, if you’re a beneficiary, things may be even easier for you.
How They Work
A beneficiary is someone chosen to receive property, assets, benefits, or funds after a person dies. They can be listed on bank accounts, retirement plans, life insurance, and real property. However, the most common place you’ll see beneficiaries listed is in a Will, where the decedent lists each person they’d like to designate to receive a gift from their estate. This is often more complicated than being a beneficiary on an account.
[Related Reading: What Is a Beneficiary Designation, And Should You Use One?]
Beneficiaries and Probate
If you’re listed as a beneficiary on an account, like a bank or retirement account, you generally don’t need to go through probate. Because beneficiaries are payable on death, a bank account beneficiary can access the money quickly unless there are forms or paperwork to complete. Some people add a loved one as a co-owner to their accounts while alive to give them immediate access to assets.
[Related Reading: What Does Probate Mean?]
Beneficiaries on an account only need to follow the rules of the financial institution and complete their process to access the funds. Each financial institution may have its own process, but being a beneficiary on an account means you don’t have to follow the same regulations as with probate.
In probate, an executor is appointed. They must list all the decedent’s assets, pay any debts and taxes, and then distribute the remaining assets, including to you as a beneficiary. Probate is more complex than being a beneficiary on an account, but court supervision helps make sure everyone listed in the Will gets what they’re owed. An experienced estate administration attorney can also help guide you through the process.
Benefits and Disadvantages
As with any aspect of Relational Estate Planning, there are both pros and cons to each option. A benefit of adding beneficiaries to your bank accounts is that it may help avoid probate, giving your loved ones immediate access to your funds. Because of this, the process is a little easier for your loved ones to manage in an already stressful time.
This doesn’t mean that there aren’t any cons, though. Naming a beneficiary on your bank account is inflexible. You can’t contest it unless you change it yourself. Forgetting to change a beneficiary can cause problems if you divorce, worry about a beneficiary’s financial decisions, or if someone passes away. There’s no court oversight, so your beneficiary can do whatever they want with your money after you pass, whether it’s what you intended or not. If you have young children, naming them as beneficiaries can raise new concerns about how their funds are managed, and may require court oversight anyway.
No matter what the decedent decides for asset distribution, it’s always a good idea to file the Will with the probate office, even if you don’t need to go through the full probate process. If something unexpected happens, having the Will on file with the Court makes things easier in the long run.
Contact Us
Probate is never simple; figuring out if you need to go through it can be stressful and overwhelming. The most important thing is to talk to an experienced estate administration attorney. A skilled attorney can explain the pros and cons of beneficiaries on accounts and in a Will, and help you create a plan that includes them properly.
If you’re an executor and struggling with managing an estate, contact us for help navigating the process. Whether or not you need to go through full probate, our team is here to make the process as easy and stress-free as possible.
Disclaimer: The information you obtain in this post is not, nor is intended to be, legal advice. This blog shares general best practices when navigating Virginia or West Virginia law, but you should consult an attorney for advice regarding your individual situation.