Consulting a New York City probate attorney is always the best option when establishing estate plans, executing a Will or deciding upon the best course of action for distributing your estate after your passing.
For some, probate court is a good option. Others may choose estate planning options that permit them to bypass probate court. This is the third blog in our series. Recently we wrote avoiding probate court is not for everyone and about the many advantages to avoiding probate. Here we are going to look at some common issues with bank accounts. One option is to create a Totten Trust, tentative trust or informal trust. These are payable-on-death accounts. Adding a payable-on-death designation can be done for many types of accounts, including certificates of deposit, checking and savings. By listing the beneficiary on the signature card, you have established where the assets go at the time of your passing.
This is not the same as a joint account. A joint account frequently comes with “right of survivorship.” In these cases, a POD (Payable On Death) designation would only apply after the death of the second account holder.
Beneficiary issues for bank account inheritance in New York:
-Children: While you can name a minor child as POD beneficiary, you might want to explore appointing an adult to hold the money on a child’s behalf. Or make other arrangements to provide some restrictions and guidance. Appointing a guardian for the funds can be easily and inexpensively done through the Uniform Transfer to Minors Act. In New York, such custodianship would be good until a minor child turns 21.
-Multiple Beneficiaries: Can be designated on the appropriate bank documents. However, you cannot name an alternate payee.
-Your Spouse: May have rights to the funds in the account and a POD should not be used as an attempt to exclude them from collecting.
-Creditors: You can’t use a POD to empty an account and short-change creditors.
You may also run into issues by trying to use a Will to change a POD designation. In cases where you change your mind, you can simply close the account or you can go to the bank and change the paperwork.
And, like with most types of inheritance, you may owe New York estates taxes and federal estate taxes on the proceeds.
New York City Probate Attorney Jules Martin Haas handles all types of probate cases, including Wills, estate planning, estate settlement, advanced directives and guardianship matters. Please call me at (212) 355-2575 for a free consultation to discuss your rights.