06 Jun How can we avoid probate for this account?

Q. Is there a Certificate of Deposit for a husband and wife where if one passes away, the CD is not subject to probate for the surviving spouse?
— Planning

A. Let’s first talk about probate.

There are three categories of property, and only one requires probate in order to access it when the owner dies.

First, property that passes by operation of law would be anything owned jointly with right of survivorship. Sometimes you’ll see these accounts titled “JTWROS,” said Yale Hauptman, an estate planning attorney with Hauptman and Hauptman in Livingston.

“When one co-owner dies the property passes by law to the surviving co-owner. No probate is necessary,” Hauptman said. “Married couples typically have most of the accounts held in this manner.”

A second category is contract property. This includes life insurance, retirement accounts and any non-retirement accounts that have beneficiaries designated upon death, he said.

“These designations ‘override’ any will and also pass outside of probate directly to the named beneficiary,” he said.

These are often designated as “POD” (payable on death) or “TOD” (transfer on death).

The third category is everything else, which would be accounts that are owned solely by the person who died with no POD or TOD designation.

“To avoid going thru the probate process to access a CD or any other account in your spouse’s name, you can either make the account jointly owned by husband and wife with right of survivorship or have your spouse designate you as a beneficiary upon death,” Hauptman said. “Either of these options will avoid the need to probate the will to access that particular account.”

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This story was originally published on June 6, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.