NON-PROBATE TRANSFERS: TOD, POD, SURVIVORSHIP

In South Carolina, the probate administration process is lengthy, expensive, and public. One of the most common methods to avoid probate is by establishing a revocable trust and funding it with assets prior to death; however, there are alternative ways to avoid probate for some types of assets. These strategies should not replace getting an estate plan and are best used to compliment an estate plan.

Joint Tenancy with Rights of Survivorship

One way to avoid probate for South Carolina real property is by creating a joint tenancy with rights of survivorship. In South Carolina, this arrangement is conclusively established by including specific language in the deed, such as: “as joint tenants with rights of survivorship, and not as tenants in common.” Upon the death of one joint tenant, the entire real property interest automatically vests in the surviving joint tenant outside of probate. This transfer occurs by operation of law, requiring only the filing of a death certificate with the county Register of Deeds. This works if one spouse predeceases the other; however, the property will not avoid probate in the case of simultaneous death, nor at the death of the second to die.

TOD and POD Accounts

Transfer on Death (TOD) and Payable on Death (POD) designations offer probate avoidance for financial accounts. These arrangements allow account holders to name beneficiaries who will receive the assets directly upon death. Regular bank accounts, savings accounts, and money market accounts can typically be structured with POD designations. The beauty of these arrangements lies in their simplicity. During the account holder’s lifetime, they maintain complete control over the funds and do not need to change the name of the account. Beneficiaries have no rights to the account until the owner’s death. Upon death, beneficiaries need only present proper identification and a death certificate to claim the assets.

One way that TOD and POD accounts can supplement an estate plan is by designating your trust as the TOD or POD beneficiary – that way nothing needs to be changed prior to death other than naming the trust as beneficiary, but the trust still controls after the owner’s death. This is not sufficient for all trust plans, and you should follow the funding instructions provided by your estate plan attorney.

Qualified Accounts – IRAs, 401(k)s, 403(b)s

Retirement vehicles like IRAs, 401(k)s, 403(b)s, and other qualified plans should avoid probate if a designated beneficiary is named. If not named, the beneficiary is determined by the institution’s policy in the absence of a designated beneficiary. Depending on the policy, the interest may revert to the estate of the deceased owner, or his or her surviving spouse or children. Many people name at least one designated beneficiary when opening an account but forget to update them after major life changes such as marriage, divorce, births, and deaths. Due to the tax implications of qualified account distributions and transfers, you should consult with an attorney and/or tax professional before making changes.