On Friday, August 28th, Attorney, Paula Mattson-Sarli discusses Payable on Death Beneficiaries.
Payable on death beneficiary designations are a form of estate planning where you can name beneficiaries on bank accounts, investment accounts, life insurance, etc.
The account will transfer on death to the person named provided that they file a claim and the death certificate.
This is usually a seamless process when done this way. However, it’s not always the best strategy.
A riskier option is having joint ownership on your accounts whether it’s your child or someone else. Sometimes this means putting one child and expecting that child to share with the other children. Or they put all of their children.
It’s risky because if one of the children has creditors after them, they could potentially come after that account. You are hopeful that everyone does the right thing with the funds, but that is not always the case.
If you have a trust, naming the trust as the beneficiary is the best strategy. This allows the trustee to be the only one to go into the account and use according to instructions.
We had a client tell us that someone at a bank advise them that having a joint account allows for quicker access to the money. While that may or may not be true in theory, it is not the best planning strategy for someone with multiple children.
Joint ownership upon the death of one account holder still needs to be addressed by providing a death certificate. The account can often get frozen whether someone calls the bank or not. Please don’t rely on risky strategies to carry out your wishes.
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