Mathematicians work with the understanding that the simplest solution to an equation is the most elegant, and this ethos of efficiency extends to estate planning as well. Though there are cases when you do have to employ strategies that contain some degree of complexity, there are a number of direct, straightforward, and efficient tools that are highly effective.

Pay on death and transfer on death accounts would fall into this category. To explain the benefits of these accounts we must briefly touch on the process of probate. If you bequeath your assets using a will your estate will have to go through the legal process of probate. Though probate can be useful in some cases, it is time consuming and it can be costly. For these reasons many people endeavor to avoid probate when they are planning their estates. What makes pay on death accounts attractive is the fact that they are not subject to the probate process.

To implement this probate avoidance strategy you open a pay on death or transfer on death account at a bank or a brokerage. You name a beneficiary to the account, but this person does not have access to the assets in the account while you are alive. You retain total control and you can do whatever you want to with the resources that you placed into the account. Should you choose to you can close the account or change the beneficiary.

When you pass away, your beneficiary assumes ownership of the assets in the account and the transaction is not subject to the probate process.

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