Kenosha Attorney for Payable on Death Accounts

Lawyer Helping Create Transfer on Death Agreements in Racine and Pleasant Prairie

Planning for the future is essential for everyone, regardless of your age or financial status. By addressing what you want to happen both during your life and after your death, you can ensure that your and your family's needs will be met throughout your life's journey. During the estate planning process, it is important not only to consider how you would like your assets to be distributed to your heirs, but what tools you will use to execute your plan. 

One of the goals of estate planning is to avoid or minimize the assets that will be subject to a probate proceeding. Nonprobate property or nonprobate transfers, such as payable on death and transfer on death accounts, are a class of tools that help serve that purpose. And while these are useful tools, they have limitations and are not a substitute for comprehensive estate plan. At Frozena Law LLC, we can provide you with guidance on the best ways to make use of these tools, ensuring that you will be able to efficiently pass your assets to your beneficiaries.

Payable on Death Accounts

Most bank accounts, including checking accounts, savings accounts, or certificates of deposit can be designated as payable on death (POD) accounts. For these accounts, the owner will remain in full control of the funds, and after their death, the funds will be transferred to the person or persons who have been named as the beneficiaries.

Typically, a person can claim the funds in a POD account by providing proof of their own identity and a copy of the owner's death certificate. However, if an account was jointly owned with another person, that person will retain ownership of the account and will be able to remove or modify the POD beneficiaries.

Transfer on Death Arrangements

While a bank account may be designated as a POD account, other types of assets may use a transfer on death (TOD) arrangement to transfer ownership to a person's beneficiaries after their death. Securities such as stocks and bonds or other brokerage accounts may use a TOD arrangement to name beneficiaries. In Wisconsin, owners of real estate property can execute and submit for recording a TOD deed that will transfer ownership of a home or other real property to a named beneficiary upon the death of the owner.

Other Nonprobate Transfers

There are a few other types of nonprobate transfers that you may be familiar with:

• Joint titling of property – Joint tenancy and survivorship marital property are ways of holding title to property that transfer ownership upon the death of an owner by matter of law, and testamentary documents like a will do not impact them. Survivorship marital property is a manner of holding property only for individuals who are married to each other.
• Life insurance – A contract for life insurance is, at the most basic level, a promise to pay the named beneficiary upon the death of the insured. Since the life insurance company pays the named beneficiary or beneficiaries directly, it usually does not require probate.
• Qualified retirement accounts - There are many different types of qualified retirement accounts, such as 401(k)s, 403(b)s, and IRAs, among others. The owner of these accounts has a right to name a beneficiary or beneficiaries, and the account will pass to those individuals without probate. There can be special considerations in the transfer of qualified retirement accounts for the named beneficiaries, but they do not impact whether the account transfer requires probate.

Benefits and Drawbacks of Nonprobate Transfers

Nonprobate transfers allow for the easy passing on of assets to one's heirs. As long as beneficiaries are named, and those beneficiaries survive the decedent, these assets can be directly passed to the new owners outside of the probate process. Nonprobate transfers can also be used to put assets into a trust upon the owner's passing.

However, they have limitations. Nonprobate transfers are only effective on the death of all of the owners. They do not give the beneficiary authority to manage the account if the owner is incapacitated, so a financial power of attorney would still be needed. Further, if an individual other than the named beneficiary is a joint owner of the account, that individual will become the owner of the account and could remove the beneficiary designation. Also, if the beneficiaries (and contingent beneficiaries, if named) pass away before the decedent, the asset will likely require probate.

Nonprobate transfer designations lack the flexibility of trusts. A trust can provide for more efficient and effective management in many situations, particularly when there are multiple beneficiaries, children from multiple or prior relationships, minor beneficiaries, and special needs beneficiaries, among other circumstances. In addition, POD or TOD assets may not be available to pay for estate expenses, such as funeral and burial costs or probate court fees, which could add stress and uncertainty for the person (often a family member) who is winding up your affairs.

Contact a Union Grove Estate Planning Lawyer

While nonprobate transfers, such as payable on death and transfer on death accounts, can be an effective tool and may seem like an easy and inexpensive way to transfer your property, they can unintentionally create problems and should be leveraged with care as part of a comprehensive estate plan. If you have any questions about how best to use payable on death or transfer on death accounts, other nonprobate transfers, trusts, or other tools to ensure that your and your family's financial needs are met, contact our office today by calling 262-237-8668. We serve clients in Kenosha, Union Grove, Bristol, Pleasant Prairie, Racine, Sturtevant, Lake Geneva, and Burlington.