What Types of Property Can Avoid Probate in Nevada?

Understanding How Certain Assets Avoid Probate

Probate is the formal court procedure for settling a deceased person’s estate. It can be time-consuming and expensive, requiring a court-appointed personal representative to inventory assets, pay debts, notify heirs and interested parties and resolve any disputes over the distribution of the estate property. Probate expenses, including court fees, attorneys’ fees and compensation of the estate representative, can substantially diminish the value of an estate. For these reasons, it can be more efficient to transfer property to chosen beneficiaries outside of probate.

Several types of property interests pass directly to designated individuals upon the owner’s death, thus avoiding probate entirely. These are the principle ones:

1. Joint ownership with rights of survivorship — Assets owned jointly, as well as community property of spouses, bypass probate if they are explicitly titled with a right of survivorship. When one owner dies, the asset automatically passes to the surviving owner(s). Joint ownership is commonly used for real estate, bank accounts and vehicles. 

2. Transfer-on-death (TOD) and payable-on-death (POD) designations — Transfer-on-death (TOD) and payable-on-death (POD) designations allow owners to name beneficiaries who will receive the asset directly at death. In Nevada, a real estate owner can execute a “deed upon death,” which conveys his or her interest in property to named beneficiaries effective on the owner’s death. POD designations are used for banking, investment and other liquid accounts. 

3. Life insurance policies and life insurance trusts — Policy proceeds are distributed directly to the named beneficiaries. They do not go through probate unless the beneficiary is the decedent’s estate or there are no valid beneficiaries surviving. A life insurance policy can be owned by an irrevocable life insurance trust, providing further estate tax advantages and creditor protections.

4. Retirement accounts and plans — Retirement accounts such as IRAs, 401(k)s and pensions are transferred directly to the named beneficiaries upon the account holder’s death, bypassing probate. It is important to review and update beneficiary designations periodically, as these designations can override instructions contained in a will.

5. Revocable living trusts — Assets are held in trust during the owner’s lifetime and upon death are managed and distributed by a successor trustee according to the trust’s terms, avoiding probate. The trust can be used for real estate and for financial accounts. However, assets must actually be transferred to the trust to be exempt from probate.

Proper titling and beneficiary designations are essential to ensure property passes as intended and avoids probate. Outdated or incorrect designations can inadvertently subject assets to probate or even lead to disputes. Regularly reviewing all ownership documents and consulting an experienced Nevada estate planning attorney can maximize probate avoidance and ensure a smooth asset transfer.

At Miller Law, Inc., our attorneys have more than a decade of experience representing Nevadans in estate planning and probate matters. Based in Winnemucca, we serve clients throughout Humboldt, Lander, Pershing and Elko counties. Call us at 775-623-5000 or contact us online to set up a free consultation.