There are people who like to think that they can do things on their own with a little bit of ingenuity. Sometimes you can go it alone, but there are some things that are better left to the experts.
With this in mind let’s take a look at payable on death or transfer on death accounts.
There are individuals who hear about these accounts and a light bulb goes on in their heads. They feel as though they have found the ideal estate planning solution, and they decide that they don’t need to discuss things with an estate planning lawyer.
These accounts are offered by banks and other types of financial institutions, even brokerages. You name a beneficiary who can’t access the funds while you are alive. But, in the event of your death this beneficiary assumes ownership of the resources in the account.
Why isn’t this a good estate planning solution?
There are a number of reasons. One of them would be the fact that you probably want to leave assets to more than one person and in varying different sums.
While you may be able to add more than one beneficiary, you are usually required to provide for an equal division of what may remain in the account after your passing.
When you place assets into such an account you are not protecting them from creditors or claimants. You are also doing nothing to limit any potential tax exposure that you may have, and you have no way of accounting for incapacity.
In truth, these accounts are of little use to those who are serious about providing for their loved ones effectively.
The wise course of action is to assume nothing on your own and discuss all of your options with a licensed estate planning attorney. He or she will gain an understanding of your wishes, evaluate the nature of your assets, and give you the appropriate professional advice.
Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.