This is a continuation of the saga from my last blog. As a reminder, I had a client come to me because her husband had passed away. He had made his Will online and my client was having trouble getting access to some of his accounts. I explained the probate process and gave some tips on what to do to avoid probate.
Now I want to explain how my client set herself up to avoid a similar mess upon her death. After we closed out her husband’s estate, she gave me a list of all of her assets. This included real estate, checking and savings accounts, retirement accounts, life insurance policies, cars, investment accounts, stocks, bonds, etc. Then we checked all the beneficiary designations.
As I mentioned in my last email, Probate assets are assets (accounts) in the decedent’s SOLE name at death. Any accounts that had her children as beneficiaries would avoid the probate process and be transferred directly to the beneficiary. This is most common with retirement accounts and life insurance policies.
The assets that were a bigger concern were the checking and savings accounts, and her home. For the checking and savings accounts, I explained that every bank has what is commonly referred to as a TOD or a POD designation. This stands for Transfer on Death or Payable on Death, and is essentially naming a beneficiary to the checking or savings account.
My client was able to go to the bank and fill out this form. By doing so, when she passes away, her children (if older than 18) would then be able to transfer their mom’s money to their names by bringing in a death certificate – no court involved! And if they are younger than 18, the funds would be transferred to a custodial account that their guardian could access for their benefit.
But what if my client thought that 18 was still too young to be handling that much money? And what about the home? She asked what else could she do to protect their home and her money so that it lasted for her girls. This is where the trust came into play.
In my next blog, I’ll dive into how a trust works and why there aren’t only for the rich!
In the meantime, I encourage you to go to your bank and fill out a TOD. This is a simple step you can take to make sure your family has easy access to your money for their care. As I’ve mentioned before, it’s not about you, it’s about your family!
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