Examining additional strategies for avoiding probate

Most readers of this estate planning blog probably do not want their beneficiaries to have to go through probate. As we’ve discussed in recent posts, wills do not accomplish that objective. There are more efficient and cost-effective ways of transferring assets to heirs. Trusts, for example, are one way that probate can be avoided -- at least for the assets that were transferred into the trust. Joint ownership of particular assets is another example.

Another option that readers should know about is a payable-on-death account, sometimes called a transfer-on-death account. With this option, the account owner can designate a beneficiary to receive the account assets upon the owner’s death.

The type of assets contained in a payable-on-death account can include savings and checking accounts, securities like stocks or bonds, retirement accounts and some other types of investments. This option also offers flexibility, similar to a revocable trust, in that the owner retains control over the assets in the account. The beneficiary’s rights do not arise until the owner’s death.

If a payable-on-death account is jointly owned and one of the owners dies, the surviving owner will have complete control over that account. That control includes the right to even change originally named beneficiaries.

However, an attorney that focuses on trusts and wills might caution that estate planners should familiarize themselves with the specific procedures associated with POD accounts. For example, procedures might vary according to the particular asset. A beneficiary of a POD account may be able to close a certificate of deposit without penalties, but in the event that he or she prefers to keep the original CD interest rate and maturity date, a bank may require its closing and new CD account to be opened.

To learn more about estate planning options, check out our firm’s wills, trusts and estates page.


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