People often ask if there is a way to lessen the burden and time commitment for loved ones after they are gone. The short answer is yes. When a loved one dies, the family is immediately left to cover any outstanding debts, funeral costs, and attorney’s fees. With advanced planning, some of these expenses are easily relieved.
Probate is the legal process wherein courts determine the ownership of the decedent’s assets. During probate, the estate’s assets are inventoried, debts of the decedent are paid, and the remaining assets are distributed to the heirs. Unfortunately, the process can be extremely time-consuming, (the average probate takes between 9 to 24 months) and costly (with costs around 3% to 8% of the estate’s total value).
One of the simplest ways to prevent and protect one’s assets is by ensuring any bank account at issue has a trusted individual identified as a payable-on-death beneficiary. Similar to the right of survivorship on some accounts, naming a payable-on-death beneficiary allows the account holder to designate an individual who will immediately inherit any money remaining in the account upon the account owner’s death. Naming a payable-on-death beneficiary does not generally require any fees or the opening of a new account, it simply requires providing the bank with the necessary information and signing the required documents/
Naming a payable-on-death beneficiary allows the designee to access the account’s assets to pay outstanding debts or funeral costs outside of the probate system. In other words, no attorney or courts are required for the beneficiary to get ahold of the account when the decedent passes. If probate is required for other assets, the payable-on-death beneficiary may use the assets to pay any fees, including attorney’s fees.
An account owner can even designate one or multiple payable-on-death beneficiaries on an account, specifying percentages to be divided at the account owner’s death. Importantly, beneficiaries named do not have access to the assets prior to an account owner’s death, and the account owner has the ability to change the payable-on-death beneficiary on a bank account at any time.
For more questions on how to designate a payable-on-death beneficiary or if this is right for you. Contact Rosenblatt Law Firm today at (210) 562-2900 and let us set you up with one of our experienced estate planning attorneys.