What Can Go Wrong With Designating Beneficiaries For Non-Probate Assets?
It can be difficult to get started on big projects; just ask any parent who has struggled to muster the energy to pick up the first piece of clutter in the living room after the kids had a three-day weekend off from school. By contrast, you get a big emotional boost when you accomplish a small task that has a major impact. For example, after procrastinating all year about making progress on your estate plan, you can go to the bank and designate a family member as a transfer on death (TOD) beneficiary of your bank account, and then walk out of the bank feeling ten years younger. You just made it easier for your family member to have access to however much money is in your bank account immediately after you die; even if your estate takes a long time to settle, the TOD beneficiary gets some money to keep him or her going until the estate settles, and without having to worry about the rest of the family putting up obstacles to it. As with any aspect of estate planning, naming beneficiaries for non-probate assets can have unexpected adverse consequences if you do not think through the process carefully. For help choosing beneficiaries for non-probate assets, contact an Orlando estate planning lawyer.
When Designating Beneficiaries on Non-Probate Assets Makes Things More Complicated for Your Heirs
You can designate beneficiaries on assets that are inherently non-probate, such as life insurance policies, but you can also designate them on assets that would normally become part of your estate and go through probate, such as bank accounts and investment accounts. With life insurance policies, the beneficiary can be anyone who depends on you financially, such as your spouse, children, siblings, unmarried domestic partner, or even an adult cousin who lived with you for much of his childhood but whom you never legally adopted. For other non-probate assets, the beneficiary should be a close family member.
If you think the bank will give you a hard time about listing a friend or distant relative as a beneficiary, it is simpler to let the asset go to probate and make the person a beneficiary of your will. When you write a will, it is your decision and no one else’s who inherits your property. The only way someone can interfere with that decision is by proving to the probate court that your will is legally invalid.
Listing Your Estate as a Beneficiary of a Non-Probate Asset, but a Trust Can Be an Appropriate Beneficiary
Maybe getting a non-probate asset originally after the original owner’s death isn’t always so great. When minors inherit property, they cannot legally own it until they reach adulthood, so the court must stay involved. Likewise, a disabled adult may lose access to government benefits if he or she gets your money as a TOD beneficiary of your bank account. If a relative is struggling financially because of drug addiction or an abusive relationship, he or she could quickly lose the money. In cases like these, trusts are a better option than listing your relatives as TOD beneficiaries.
Contact Gierach and Gierach About TOD Beneficiaries
An estate planning lawyer can help you make wise decisions about listing beneficiaries for non-probate assets. Contact Gierach and Gierach, P.A. in Orlando, Florida to discuss your case.
