Nonprobate and Nontrust Transfers

California provides various options to ensure the efficient distribution of assets after an individual’s passing. Nonprobate and nontrust transfers are two methods that allow for the transfer of property outside the probate process and can provide significant advantages to individuals seeking to streamline the distribution of their assets. This article touches on nonprobate and nontrust transfers in California, exploring their definitions, benefits, and key considerations.

nonprobate transfers

Nonprobate transfers, also known as “transfer by operation of law,” refers to the transfer of assets upon an individual’s death without a trust administration and without the need for probate court involvement. In California, several types of nonprobate transfers exist, including:

Joint Tenancy with Right of Survivorship: When two or more individuals co-own an asset, such as real estate or a bank account, the surviving owner automatically inherits the deceased owner’s share. This transfer occurs outside the probate process.

Payable-on-Death (POD) Accounts: For bank accounts, certificates of deposit (CDs), or certain securities, individuals can designate a beneficiary who will receive the funds upon their death. The assets are transferred directly to the beneficiary, avoiding probate.

Transfer-on-Death (TOD) Registration: Similar to POD accounts, TOD registration allows individuals to name beneficiaries for assets like stocks, bonds, or mutual funds. The assets are automatically transferred to the designated beneficiaries upon the owner’s death.

Life Insurance Policies: Proceeds from life insurance policies are distributed to the named beneficiaries without going through probate, ensuring a swift transfer of funds.

nontrust transfers

Nontrust transfers, commonly referred to as “transfer by contract,” involve the distribution of assets through contractual arrangements, rather than relying on a living trust. These transfers are typically initiated by executing specific legal documents. Key examples include:

Revocable Transfer on Death (TOD) Deed: In California, individuals can utilize a TOD deed to transfer real estate to designated beneficiaries upon their death. This instrument allows the property to bypass a trust and probate while remaining under the owner’s control during their lifetime.

Beneficiary Designations: Certain assets, such as retirement accounts (e.g., IRAs, 401(k)s), annuities, and pension plans, allow individuals to designate beneficiaries. The assets are distributed directly to the beneficiaries upon the owner’s death, avoiding a trust and probate.

Prenuptial and Postnuptial Agreements: Couples can establish agreements that outline the disposition of assets in the event of death or divorce. By specifying the distribution of property, these agreements provide clarity and can help bypass trusts and probate.

Life Insurance Policies: Proceeds from life insurance policies are distributed to the named beneficiaries without going through a trust or probate, ensuring a swift transfer of funds.

Benefits