You\u2019re wondering about what exactly a payable on death account is and how it relates to your needs. What do you need to know about designating beneficiaries, unexpected incapacitation, and backup beneficiaries?<\/p>\n
When it comes to estate planning law, learning new definitions can be intimidating. Fortunately, a simple explanation of the terms will help clear things up.<\/p>\n
A POD account allows you to designate a beneficiary (or multiple) to receive the money in your account when you pass. As the owner of the account, the money is yours to do with as you please while you\u2019re still alive. Once you pass, the beneficiaries you decided on may withdraw the funds without probate<\/a>.<\/p>\n You can choose anyone to be your account beneficiary, from your children to your best friend. Some banks or financial institutions will require you to provide the beneficiary\u2019s social security number. So, it\u2019s a good idea to let your intended beneficiary know that you\u2019re designating them as such.<\/p>\n Before you choose a beneficiary, it\u2019s important to be aware of your bank account beneficiary rules, along with specifications for a primary vs. contingent beneficiary. To help you understand this more clearly, let\u2019s look closer at each of these terms and how they differ from each other.<\/p>\n A beneficiary is an entity, trust, or person that the account holder appoints to receive some (or all) of the assets in the holder\u2019s account once they die.<\/p>\n When you invest in an insurance policy, 401(k)<\/a>, or another beneficiary-named financial account, you should name the institution or person you wish to receive your assets once you pass. These will be your primary beneficiaries.<\/p>\n This refers to the institution or person that receives the assets in your account if your primary beneficiary isn\u2019t able or refuses to do so. If your primary beneficiary passes before you can\u2019t legally accept the assets, or declines their inheritance, the contingent (secondary) beneficiary is next in line.<\/p>\n You don\u2019t have to choose only one primary beneficiary and one contingent beneficiary. You can select percentages for each, as you see fit. For instance, you could designate your wife as your primary beneficiary for the entire account, then select two close relatives to split the account as contingent beneficiaries.<\/p>\n Access to the payable on death account transfers to the living beneficiary once the account holder passes. The account should be set up for easy access once you supply the necessary documentation. As the primary beneficiary, you only need to show the deceased person\u2019s death certificate<\/a> and proof of your identity to the financial institution.\u00a0<\/span><\/p>\n This process is usually quick, but some states might have a slight delay, depending on the local laws.<\/p>\n The assets in a POD account only transfer upon the account holder\u2019s death. If the account owner becomes incapacitated, their family will most likely have to go to court to access the assets. A payable on death account doesn\u2019t function as a joint account while the account owner is still alive.<\/p>\n Keep in mind, even if you\u2019re still young and healthy, unforeseen illnesses and accidents can always occur. And your named beneficiaries won\u2019t be able to access your assets to pay your medical bills without getting the court involved.<\/p>\n While the account holder is alive, their POD account is safe from the beneficiary\u2019s creditors. Once the account owner passes, however, the money is subject to lawsuits and judgments like any other asset.\u00a0<\/span><\/p>\n If your beneficiary has credit issues, it\u2019s imperative that you consult an estate planning attorney for more information.<\/p>\n Executors have a unique relationship with the beneficiaries of a will. The executor must make sure to manage the deceased person\u2019s estate in accordance with probate rules in the state.\u00a0<\/span><\/p>\n Does an executor have to show accounting to beneficiaries? The executor must make sure that the beneficiaries receive the assets that the deceased person specified in their will. It\u2019s also their job to provide accounting of distributions and assets for the beneficiaries and court.<\/p>\n The executor doesn\u2019t have to be a financial or legal expert, but they do need to act with \u201cfiduciary duty<\/a>,\u201d which means honesty and good faith.<\/p>\n The executor of an estate has a number of obligations that will differ depending on how complex the financial circumstances of the deceased person are. Here are a few other duties that an executor is responsible for:<\/p>\n These are just a few of the executor\u2019s duties, but there are others to be aware of. If you have any questions about your duties as the executor of a deceased person\u2019s will, contact an estate planning attorney.<\/p>\n Even if you\u2019re appointed the executor of a will, you aren\u2019t obligated to accept the position. You may refuse the offer or quit during the process if it turns out you can\u2019t complete the requested responsibilities. You\u2019re also free to seek out legal help during this process, if you need it.<\/p>\n If you live in Arizona and are planning out your estate or you are the beneficiary to an estate in Arizona, JacksonWhite’s estate planning planning can help you. We have been helping Arizona handle a wide variety of estate planning services<\/a> for over 30 years. Often times people are put in difficult situations after someone’s passing, where strategic asset and credit management is needed. With the help of an Arizona estate planning attorne<\/a>y even the most difficult situations can be made simple and fair.<\/p>\nBeneficiary Rules and Definitions<\/h2>\n
Beneficiary<\/h4>\n
Primary Beneficiary<\/h4>\n
Contingent Beneficiary<\/h4>\n
Multiple Beneficiaries<\/h4>\n
How to Claim Deceased Bank Accounts<\/h2>\n
Unexpected Illness or Injury<\/h2>\n
What if the Beneficiary has Credit Problems?<\/h2>\n
Executors and Beneficiaries<\/h2>\n
What Else is an Executor Responsible for?<\/h2>\n
\n
Estate Planning Assistance in Arizona<\/h2>\n