Be Sure to Update the Beneficiaries on Your Payable on Death Bank Accounts Regularly
In the field of education, there is a saying that good teaching means always revising your plans. Even if a lesson worked beautifully last year, a good teacher reviews the lesson plan before implementing it during the current year and adds any changes that could make it work better. The importance of constant revision applies to estate planning as much as it does to teaching. If you are young enough to read this blog, you are young enough to update your estate plan, and you still have time. In fact, you should update it, even if you think it is brilliant, pandemic-proof, and recession-proof. The best way to do it is with the help of a Hillsborough County estate planning lawyer.
Payable on Death Bank Accounts: Estate Planning for the 99 Percent
If you have a bank account, no matter how much or how little money is in it, you can bequeath it to a family member (or to anyone else) without the account having to go through probate. The way to do that is to designate the account as payable on death (POD) and specify the beneficiary who will become the owner of the account after your death. A POD account is not the same as a joint bank account, because the beneficiary does not have any access to the account or its contents while you are alive. The easiest way to add a POD beneficiary is to include a POD provision when you open the account, but it is also possible to designate a beneficiary for an account that you have already opened. It is much less work than setting up a trust, but it is equally effective for keeping your bank account out of probate.
What Could Possibly Go Wrong with Listing a Payable on Death Beneficiary for Your Bank Account?
In some cases, designating a beneficiary for a POD account can backfire, meaning that the POD provision can fail to keep the account from going to probate. Usually, this happens when the beneficiary dies before the original owner of the account. If there are no living beneficiaries when the original owner of the account dies, then the account goes to probate. There are several things you can do to ensure that your POD account goes to a living beneficiary and stays out of probate:
- Name an alternate beneficiary. For example, you can say that your sister Amethyst is the beneficiary, but if she predeceases you, then your niece Beryl becomes the new beneficiary.
- Name multiple beneficiaries. For example, you can name your seven siblings all to inherit equal shares of the account. If only two of your siblings outlive you, then each surviving sibling gets half of the money in the account.
- Review the list of beneficiaries every year. If one of the beneficiaries has died since you last reviewed the POD provisions, name a different beneficiary.
Estate Planning Saves You More Money Than It Costs You
POD bank accounts are just one of the ways that estate planning saves money for you and your heirs. Contact Tampa estate planning attorney David Toback for a consultation on your case.