As many have found out, a last will and testament is an important component of a complete estate plan but should not stand alone. A payable-on-death designation is one of the easiest and most useful estate plan actions you will find. Read on and find out the many benefits of having one or more of these designations in place as part of your estate plan.
Avoid Probate With a Payable-on-Death Designation
You cannot avoid probate entirely unless the estate falls below a certain value but you can do a lot to keep property away from probate's legal grasp. A payable-on-death designation does just that. You can attach this designation to any number of bank or investment accounts and those assets never need to be probated. Staying out of probate means that they can be distributed to the designated beneficiaries as soon as the death certificate becomes available. Compare that to the months most have to wait for probate to be final.
Payable-on-Death Designations Are Private
Almost all aspects of probate are public knowledge. The last will and testament can be viewed upon request by anyone with a curiosity to do so. Anything you can keep away from probate stays between the beneficiaries and personal representatives with no need for anything to be public knowledge.
These Designations are Easy to Accomplish
A simple document is all that is needed to create a payable-on-death designation. The form is provided by the bank or investment company and the names and Social Security numbers of the beneficiaries are listed on the account. The owner of the account must agree to the designation with copies provided to the beneficiaries and one kept on file at the institution. Upon the owner's death, the account is frozen pending presentation of the death certificate. If more than one beneficiary is listed, the proceeds are divided evenly. Talk to your estate attorney if the funds in the account exceed FDIC protection and coverage. You might need to create more than one payable-on-death document to cover various accounts.
Beware of Creditors
One of the main functions of a last will and testament is to protect creditors owed money by the estate. Payable-on-death designations and other means of avoiding probate can, in some cases, deprive priority creditors like the IRS from collecting on debts owed. If that happens, be aware that some creditors can sue the beneficiaries of payable-on-death designations and bring about payment. This would only happen if there is insufficient funds or property otherwise available thru the probate process.
To find out more about this way of avoiding probate and making quick work of inheritances, speak to your estate and trust lawyer.Share