Show #484 Airing Sunday 7/14/09
As you hear about the continuing bank struggles, mergers and failures, you may have switched accounts from one local institution to another. But when you moved, did you title your assets to avoid probate at death? Here to explain is my very lively law partner, Mike Solomon.
Question: What's the problem when people switch banks?
Answer: Sometimes they don’t make sure that their accounts will avoid probate at death. And going through probate can create all sorts of problems for your family:
- probate can take months or years in court,
- the paper work can be a real hassle,
- and your family might pay thousands of dollars in legal fees.
Question: How doe we avoid probate?
Answer: Accounts just in your name will go through probate when you die. There are 3 major ways to avoid probate:
- put the account in joint names,
- name payable on death beneficiaries,
- or put the account into a trust.
Question: Which is the easiest and best?
Answer: Easiest and best may not be the same. You can put your account into joint names very easily. Just add a spouse, child, parent, etc. But they become a co-owner right now, and that can be a big problem. They can take all your money, and if they get a divorce or they are sued, your money may be in jeopardy.
Question: What about a payable on death account?
Answer: That’s pretty easy too, and a lot safer. You can name a child or other heir as a beneficiary on the account, which means they will get the account at your death without going through probate. But they have no rights during your lifetime.
Question: What about a trust account?
Answer: You can create a revocable living trust, and make the trust the owner of the account.
You are the only owner while you are alive, and your heirs named in the trust get the account at your death.
It’s more complicated than a POD account, so if all you have are bank accounts, you probably don’t need a trust.
But if you own other assets, including a home, then a trust may be the better approach because it gives you a lot more flexibility.
Whether you have changed banks recently or not, this is probably a good time to check your accounts to make sure they avoid probate and fit your other goals. To learn more about avoiding probate, you’re invited to a free program. Call the number that’s next for more information.
