Many people use Pay on Death or In Trust For designations to pass assets such as bank accounts, money market accounts, etc., to their heirs outside of probate. This is one way to do so, however, like any other strategy you need to know the ins and outs of doing so.
- Tell your heirs about their status on your accounts and what steps they need to take on your death to access the accounts. The institutions will not know that you have passed and will give the money in your accounts to the state after there has been no activity for a period of time. You don’t want that to happen.
- Know how the account will be divided if you have multiple heirs. Some institutions will equally divide the account between the heirs and others follow a first come first served policy. Know what the institution’s policies in this regard are so that your wishes are followed.
- Keep track of your heirs and make the appropriate changes on your accounts if they die before you do. Some institutions have procedures in place so that the account will go to the estate of the heir if the heir dies before the account holder. Others want to avoid the hassle and if the named heir can’t claim the account, the institution will turn the account over to the State after a period of inactivity.
Pay on Death and In Trust For are good tools to pass assets outside of probate. Like any tool, you need to know how to use it properly.
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