Hey there, savvy planners! Let’s talk about a nifty tool in the estate planning game: the Transfer on Death (TOD) designation for your bank accounts. The TOD designation is essentially putting a beneficiary on your bank accounts, just like a life insurance policy. They can’t access the money until after you pass away. We at Ladimer Law, have a hot tip for you – when it comes to choosing who gets your moolah, go with a trust, not just any Tom, Dick, or Jane. Why? Because trusts are like the superheroes of estate planning, and we’re here to spill the beans in a way that’s as easy as pie.
Unlocking the TOD Mystery
So, what’s this TOD thing, you ask? A Transfer on Death designation is a legal arrangement that allows an account owner to specify who will receive their bank accounts upon their death. This is a common feature offered by banks for various accounts, including savings, checking, and investment accounts. When you pass away, the TOD designation ensures your checking and savings accounts skip the whole probate drama and go straight to the chosen person or entity. Smooth, right?
Trust the Trust – Not the Average Joe (nor your favorite child)
Now, Ladimer Law is all about trust – literally. Instead of pointing the TOD finger at an individual, we say, “Why not trust a trust?” And let us explain why. Picture this: you want your hard-earned cash to go where you intend, so you name your favorite child as the TOD. You feel it in your heart that they will follow your instructions on sharing the account with their siblings. But what if they meet their maker before you do? That money goes to their children. OR what if they change their mind? They aren’t legally obligated to share the accounts with anyone, no matter what your intent was.
Trusts are like wizards with a magic wand that can make your wishes come true. You can add cool clauses, like what happens if your child(ren) can’t catch the money baton. It’s like planning for the unexpected without the drama.
Money Manager Extraordinaire
Here’s the lowdown: you want a trust to be the main collection pot of all of your assets. This can’t happen if your TOD designee is your children (or only one of them!). When a trust is your TOD designee, the Trust will be the main collection pot of all your assets – no need to worry about unpaid bills or taxes raining on your parade. The trust steps up, pays off those debts, and THEN dishes out the assets to your trust beneficiaries. What would be worse than having to pay back some of your inheritance because of final expenses and taxes?!
Shielding Your Squad
Back to the same scenario where you’ve picked your favorite child as your TOD designee. What if one of your other kids gets upset because their sister had the bank accounts in just her name? Having the cash flow to a trust reduces the opportunity for awkwardness among the children. And as I’ve seen more often than I’d like, death always brings out the worst in people. You never know how your children will react to losing a parent.
Wrap it Up
In a nutshell, Ladimer Law’s tip is to pick a trust as your TOD superhero for bank accounts. It’s like giving your money a superhero cape – flexible, efficient, and always looking out for your crew. So, start planning, be the superhero of your estate, and let your assets dance their way to the right hands without the hassle. Trust us, it’s the way to go!
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Ladimer Law specializes in estate planning. We protect our clients, their heirs, and their assets by listening closely, knowing the law, and executing estate plans that fit and evolve.