Dear Peter,
In the broadest sense, a beneficiary means someone who receives money or assets from a benefactor after the benefactor dies. Beneficiaries are found in many contexts, not just life insurance, wills, and trusts. Probably the one of most common contexts people use beneficiaries is on their bank accounts. Two newer contexts are houses (or any real estate) and vehicles. Most people want their estates to avoid probate after their death, and the legislature realized that a lot of people have what is known as “small estates” that consist mainly of their house, vehicles, and bank accounts. If you can name beneficiaries on those assets, those assets will pass automatically upon death, with no need for probate. Thus, the legislature created the Transfer on Death Deed for houses in 2008. In 2017, the law changed so that we can now add a beneficiary to vehicles with a form from the Minnesota Department of Vehicle Services. The form is called “Application for Transfer-On-Death Beneficiary” and can be found at the Minnesota Department of Public Safety’s Driver Vehicle Services division website at https://dps.mn.gov/divisions/dvs/. Look under the Motor Vehicle forms under the Documents page.
The idea is to get your estate to be all or mostly all “non-probate” assets. Non-probate assets are those that pass automatically, such as those with beneficiaries. If your estate then has probate assets that consist of titled personal property (e.g. bank accounts, vehicles) totaling less than $75,000 and no real estate solely in your name, your family still won’t have to file for probate because they will be able to use an affidavit to get those titled personal property assets into their name. If the probate estate has titled personal property assets totaling more than $75,000 or real estate in your name only, then probate will be needed despite your planning efforts. Thus, it’s a good idea to review your assets periodically and see how they are titled and whether naming beneficiaries or other planning is necessary.
Rest assured that the beneficiary cannot gain access to the asset just by virtue of being a beneficiary. Beneficiaries have no control over the asset. You, as the owner, control the asset. You can sell the asset and get all the proceeds. The beneficiary has no say over what you do with an asset. Also, for a vehicle, your beneficiary will not be liable for any accident because they are not an owner. You can change beneficiaries at any time before your death. Also, because you have not given anything to your beneficiary until your death, you have not given any gifts that will cause ineligibility for any government assistance programs, such as Medical Assistance.
Adding beneficiaries to assets is a fairly easy thing to do and has the potential to make life easier for your family after your death because probate might not be necessary. Beneficiary designations are important planning tools, but they might not be the best tool for all situations – as always, seek individual advice from a private attorney to discuss your goals.
