Which of the following is an excellent non-probate transfer device?

Life insurance with a named beneficiary serves as an excellent non-probate transfer device because it allows the proceeds from the policy to be paid directly to the designated beneficiary upon the death of the insured. This transfer occurs outside of the probate process, meaning the assets can be transferred quickly and without the complexities often involved in probate court. By naming a beneficiary, the insured ensures that the life insurance benefits will be available to the named party without delays, making it an effective tool for estate planning. Additionally, this method helps to maintain privacy since the transaction does not become part of the public probate record.

In contrast, residential property is typically subject to probate unless other arrangements, such as a transfer-on-death deed, have been made. Cash gifts, while they can be effective for reducing the taxable estate, do not inherently facilitate non-probate transfers; they are considered gifts at the time of transfer, rather than a mechanism for posthumous asset allocation. Investment accounts without a designated beneficiary also undergo probate, which can delay access and lead to additional administrative costs. Thus, life insurance with a named beneficiary clearly stands out due to its straightforward and effective non-probate transfer capabilities.