Some people think that they can effectively avoid estate planning by listing Pay on Death (POD) or Transfer on Death (TOD) beneficiaries on their bank accounts. While this can work once in awhile, it is very risky.
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Listing beneficiaries on some assets, as opposed to having a well-drafted estate plan, can lead to a variety of issues.
Utilizing PODs or TODs instead of estate planning can:
- Fail if the beneficiary predeceases you and lead to probate court;
- Hurt the beneficiary, if they receive government aid or assistance;
- Be subject to abuse if your Power of Attorney changes the name;
- Create liquidity problems if there is not enough cash in the estate to pay expenses and taxes;
- Undermine future wishes, if you forget to update beneficiaries on all accounts;
- Cause problems during incapacity; and
- Lead to probate.
To minimize risk of probate and potential issues, drafting a complete and thorough estate plan is always recommended.
Trusts can protect minor beneficiaries and beneficiaries with disabilities or special needs.
Using PODs does not take into account all issues, does not allow for incapacity planning, and does not protect assets from creditors and other potential issues.
Utilizing estate planning, as opposed to PODs or TODs, can allow you to protect yourself in the event of incapacity, your assets, and your loved ones.
If you need help determining what type of estate planning documents are right for you, contact Rickard & Associates today.
Contact us today to help you get the right documents in place or to update your current estate plan. We will plan so that you don’t have to worry about your future.
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