High Caliber Legal Service

Can you use certificates of deposit to bypass probate?

On Behalf of | Jun 22, 2022 | Probate & Estate Administration |

Probate can be a tedious process. It entails reviewing the assets and wishes of a deceased person and determining how those assets should get distributed. Even if there’s a detailed will, there is often no actionable response until probate proceedings validate the existence and authenticity of those wishes.

Certificates of deposit (CDs) are a low-risk venture. You put aside money for the short-term, and your return on investment is modest but guaranteed.

How probate affects CDs

Probate’s impact on a CD is based on how the CD was set up. Here are two of the more common ways to keep CDs out of the probate process:

  1. The CD is joint property. If there is a co-signer on the instrument, the CD passes directly to that person without probate involvement.
  2. There is a payable-on-death beneficiary. The owner of the CD has set up an individual to inherit the funds upon the owner’s death.

If either option applies to your CD, it will not end up in probate. Otherwise, it will fall to the court to distribute.

Avoiding unnecessary conflict and confusion

Setting up avenues of inheritance that avoid probate can be an enormous relief for your grieving family members. As long as either of the above two procedures are in place, CDs do not have to go through probate. This rule also applies to most types of accounts and financial instruments.

Using CDs in these manners is popular for its time constraints and low-risk investment. CDs are often part of inheritance settlements. Using the methods described above can help to prevent a drawn-out – and often expensive – probate process for your loved ones.

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