Title to property is one of the things that controls whether or not a probate is necessary.
There are many ways to title property:
1. Sole name of a person (only decedent‘s name appears on bank account, house, or other assets).
2. Tenants in common (each tenant owns his or her own portion as a separate, distinct interest in the property that cannot be transferred or legally destroyed by the other co-tenant(s). One tenant in common passes his/her share to his/her heirs or devisees at death. At decedent‘s death, decedent‘s tenant in common share requires a court probate proceeding. The decedent‘s heirs or devisees will then own the property with the surviving co-tenant(s).
The above two forms of property ownership require a court proceeding to pass ownership to a decedent‘s heirs or devisees. They are considered part of the decedent‘s probate estate. They are also part of the decedent‘s gross estate.
Other ways to title property include:
1. Joint tenants with right of survivorship (at death of one joint tenant, property passes to surviving joint tenant(s) without a probate or court proceeding). Joint tenancy title may appear as ―joint tenants,‖ ―joint tenants with right of survivorship,‖ or ―jtwros.‖ Any of these is a permissible designation of a joint tenancy for deeds, financial accounts or other documents. In cases involving a joint tenancy deed to real property, the decedent joint tenant‘s death certificate should be recorded in the county clerk‘s office in the county where the property is located.
2. Payable on death (POD) accounts (name a beneficiary for bank accounts or U.S. savings bonds; beneficiary automatically receives the property after the owner‘s death without a probate, see Sections 45-6-201 through 227).
3. Other assets with named beneficiaries, such as life insurance, annuities, individual retirement accounts (IRAs) (owner names in writing a beneficiary and at owner’s death, the property passes automatically to the named beneficiary without a probate, unless the beneficiary has predeceased the owner). However, if the owner has named ― my estate as the beneficiary, a probate will probably be necessary,
4. Transfer on death (TOD) accounts (name a beneficiary to receive stocks, bonds, and other investment securities; beneficiary automatically receives the property after the owner‘s death without a probate, see Sections 45-6-301 through 311).
5. Transfer on death deeds (TODD) for real property (must be prepared and recorded properly before the owner‘s death to pass title to the real property automatically to the TODD beneficiaries after the owner‘s death without a probate, see Section 45-6-401).
6. Trusts (trustor can create a written trust during his/her lifetime, transfer all property into the name of the trustee of the trust, and the trust property passes automatically to named trust beneficiaries upon trustor‘s death without a probate).
7. Life estates (a person retains an ownership interest during his/her lifetime, then upon his/her death, the property passes automatically to designated remainder beneficiaries without a probate; life estates usually occur with real property and require a special deed to create this interest).
The above seven forms of property ownership usually do not require a court probate proceeding to pass ownership to a decedent’s heirs or devisees. Therefore, they are not considered part of the decedent’s probate estate, but are part of decedent’s gross estate.
Source: New Mexico Probate Judges Manual (2013)
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