Efficient Probate Avoidance With POD Accounts
It is said in the field of mathematics that the simplest solution is the most elegant, and this is something that is universally applicable. When it comes to estate planning it is often times difficult to keep things simple because of the intricacies of the tax codes, Medicaid and Medicare rules, the probate process, and the sheer quantity of details that must be addressed when you’re preparing for all the eventualities of aging.
One way to streamline things when you’re planning your estate is to implement strategies that enable probate avoidance. Probate is the legal process that your estate must pass through before your heirs will receive their inheritances. During this interim the probate or surrogate court in the county that is local to you will determine the validity of the will, hear any arguments from people that may want to contest it, and ultimately supervise the administration of the estate by the executor. This process can take quite a bit of time and cost a considerable amount of money, and of course it opens the door for people to challenge your wishes which can draw the matter out for years in some cases.
One very simple and straightforward way that you can transfer assets to your loved ones outside of the probate process is through the creation of pay on death or transfer on death accounts. These can be opened at a bank or financial institution of your choosing where you simply fund the account and name a beneficiary who would assume ownership of the funds upon your death, and this and transfer would take place outside of probate. Some brokerages also offer transfer on death accounts.
In addition to the ease of transfer, pay on death accounts provide versatility because the funds are readily available to you throughout your life and you could change the beneficiaries or even close the account at any time. Estate planning is usually going to require a number of different components, but pay on death accounts can certainly be one useful piece of the puzzle.
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