Doing estate planning may seem like an overwhelming job filled with complicated paperwork. So you’ve been putting off the process until you have more time. The good news is there’s a quick and easy way to get started. You can select a bank account beneficiary by following a few simple rules.
This cost-free service will transform your accounts into a type of informal trust commonly referred to as a payable on death (POD) account. Your financial institution can provide you with a form for each account. The person who you choose to inherit your account is referred to as the beneficiary. After your death, the account beneficiary can immediately claim ownership of the account.
Before you set up your account, let’s examine the bank account beneficiary rules more closely.
Who Can Be an Account Beneficiary?
You’re in charge when it comes to naming an account beneficiary. It can be anyone you chose, from your best high school best friend to your kids. You can even designate multiple beneficiaries to a single account, and select the percentage each person receives. Some financial institutions may require your beneficiary’s social security number. So you’ll probably need to discuss your choice with your intended beneficiary.
Charitable groups and nonprofit organizations can serve as bank account beneficiaries. You will need to be certain the group you select is recognized by the Internal Revenue Service as a charitable organization. Corporations, partnerships and limited liability companies cannot be your designated beneficiary.
If circumstances in your personal life change, make sure to update your account beneficiary. If you’re not careful, you could unintentionally leave money to your former spouse. If your beneficiary dies before you, the account assets become part of your estate to be distributed under the terms of your will.
What Rights Does an Account Beneficiary Have?
While you’re alive, your accounts are your personal property. You can spend your money, close your account or change beneficiaries. Your account will operate just as it did prior to designating a beneficiary. A beneficiary has no rights to your property until after you pass. The only difference you may notice is your account being referred to as an “in trust for” or ITF account.
When Can an Account Beneficiary Claim Account Assets?
After your death, the beneficiary has a right to collect any money remaining in your account. They simply need to go to the bank with proper identification and a certified copy of the death certificate. The bank will have a copy of the form you filled out naming them the beneficiary.
The bank will provide the new account owner with a few additional forms, and them the money is transferred. No waiting for probate. The laws of your state may require a brief waiting period and creditors may have the right to settle final debts.
Why Select a Bank Account Beneficiary?
A POD account is a popular method for avoiding probate and quickly transferring property. After you die, all your assets that are not in a trust or otherwise designed to pass outside of probate, will be distributed under the court’s supervision. The legal process of probate can take months or even years to complete. During this time, your loved ones have no access to the property you intended for them.
When you name an account, does not become part of your estate after your death. It is transferred to the beneficiary and becomes their personal property.
Free Consultation with a Utah Estate Lawyer
If you are here, you probably have an estate issue you need help with, call Ascent Law for your free estate law consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
