Here’s a riddle, and you may not find the answer funny: when does a beneficiary named in a will not get the assets left to them in a will? The answer is when the asset is payable on death to someone else. Ohio law authorizes individuals to enter into contracts with banks and other financial institutions to make the contents of a financial account payable to a designated beneficiary on the owner’s death. These are called “payable on death” or “POD” accounts if the funds are in a bank account. Brokerage accounts and other assets, like car titles and even real estate, may be “transfer on death” or “TOD.” POD and TOD assets operate similarly, with the same advantages and disadvantages.
At first glance, POD accounts appear to have a number of advantages. For one thing, they bypass probate court. Upon the death of an account holder, the designated beneficiary needs only to present… Read More
The situation you’re about to read about sounds like a question that might end up on the Ohio bar exam—but don’t let that stop you from reading! The problem really is an interesting one, and more to the point, something that could end up affecting the property of you or someone you love. Even more importantly, we will tell you how to avoid a loss that you might not have ever seen coming.
If you have been reading this blog for awhile, you have heard about transfer on death accounts, which allow an account holder to place a designation on a bank or other financial account so that, when they die, the account automatically passes to the transfer on death (TOD) designee. But TOD designations aren’t only for bank accounts. You can transfer securities, vehicles and even real estate with a TOD designation, which is a beneficiary designation. A significant advantage of a TOD designation is that it allows the asset in question to pass immediately, an… Read More
Your estate plan includes a last will and testament, and likely a living trust and powers of attorney. If your goal is to keep your assets out of probate and to provide for your children, you may be overlooking another tool for estate planning: beneficiary designations. Here's a guide to using beneficiary designations in your estate plan.
You probably have some assets with beneficiary designations already, such as life insurance policies. There are also other assets for which you can plan with beneficiary designations, and some documents, such as a divorce decree, that may require you to establish beneficiary designations on certain assets. By deliberately planning your beneficiary designations, you can ensure that your assets pass as you intend with a minimum of red tape.
If you are like many people, your retirement plans are some of your most significant assets. Most retirement plans, like 401(k)s and IRAs, pass through beneficiary designations, not through a will. If you have a 401(k), federal law says that your spouse is your beneficiary. Even so, it is advisable to name him or her as beneficiary on your co… Read More
These days, people move around more than ever. You might buy a house in Dayton, get transferred out of state for work, and continue to rent out the Ohio property. Or you might spend most of your life in Ohio, only to spend your later years living with an adult child in a neighboring state. Whatever the reason, there are many people who live outside of Ohio, but continue to own real property in the state. When they die, that real property needs to be disposed of. Ancillary probate in Ohio is one mechanism to deal with real property whose owner died outside of the state.
Ancillary probate is addressed in Chapter 2129 of the Ohio Revised Code. If a resident of another state dies owning property in Ohio, someone must apply to be appointed ancillary administrator in the county in Ohio where property of the deceased person (decedent) is located. If the decedent had a will, the person named as the executor in the will is generally eligible to serve as the ancillary administrator of the Ohio estate. If the decedent did not have a will (they died intestate), the ancillary administrator must be a resident of the county in which the property is located.
As a practical matter,… Read More
Will a will prevent probate? A surprisingly common misconception is the idea that having a valid will in place prevents one's estate from going through the probate process. In fact, leaving property to your loved ones via a last will and testament guarantees that at least a part of your estate will have to go through probate. Probate is the process of authenticating a will (if one exists) and distributing assets according to its terms.
What having a will does prevent is an estate being distributed according to Ohio's intestacy laws. These laws are intended to distribute the property of a deceased when there is no will or other valid estate plan. Intestacy laws try to approximate what most people would do with their property had they had an estate plan. Typically, people would provide first for their spouse and children, and then for more distant relatives. Like other laws that are intended to cover a wide range of people, intes… Read More
One common way that people try to avoid the probate process is by holding assets jointly with other people, such as a spouse or adult child. If the documents creating the joint ownership are executed properly, the asset will pass directly to the surviving joint owner when one of the owners dies.
This is good news for most people, but unfortunately it usually doesn't eliminate the need for probate. What joint ownership of a bank account may do is help reduce the size of the probate estate so that it qualifies for the small estate process.
Often, however, individuals with bank accounts large enough to potentially affect whether their estate is considered "small" have enough other assets for their estates to require probate. A better way to avoid probate altogether is with the use of a living trust and/or other estate planning tools.
Regardless of whether having a joint bank account lets you avoid probate altogether, you do… Read More
For many people, avoiding the probate process and having their assets pass outside of probate after their death is a priority. Ordinarily, having a life insurance policy does not interfere with that goal. In most cases, the proceeds of a life insurance policy pass directly to the named beneficiary without any probate involvement.
However, there are circumstances in which life insurance benefits must go through probate, which can delay payment to loved ones and even reduce the amount of funds available through the policy. Fortunately, there are relatively simple ways to avoid these situations, and ensure that funds are available for you loved ones when they need them.
What happens if you have someone named as the beneficiary of your life insurance policy, and your beneficiary dies? The answer depends on when the beneficiary dies. If they die before you, the policy benefits will go to any co-primary benef… Read More
Sometimes life seems more complicated than it needs to be. You have an asset, like a bank account. You know who you want to have the money in that account when you die. Why should you have to identify that account in your will and specify who should get the money in it? Why should they have to wait for months for probate to be completed to access the funds you meant them to have?
You could always make your intended beneficiary a joint owner of the account while you're alive. That would keep the account assets out of probate. But that comes with its own burdens: a joint owner of the account has equal access to the funds in it, even if those funds were provided by the other joint owner. Joint accounts are fine in some situations, but problematic in others.
There's got to be another way—and there is. It's called a transfer on death (TOD) account, and it bypasses both probate and the issue of an intended beneficiary dipping into funds earlier than you'd prefer.
Transfer on death accounts, sometimes also called payable on death… Read More
One of the simplest ways to keep an asset out of probate is to title it in such a way that it is not subject to the probate process. In most cases, your access to or use of the asset won't change—only the way the asset is transferred after your death.
It's important to be aware of how using title to an asset can keep it out of Ohio probate, and the benefits and risks of transferring assets in this way.
In some cases, changing the way an asset is titled can be accomplished with minimal assistance. One example of this involves bank accounts. If you have $100,000 in a bank account in your name, and you want it to pass to your adult son after your death, you can go down to the bank and convert the account into a joint account, titled in both your names. When you die, your son will become sole owner of the account so long as survivorship rights are specified in the document creating the joint ownership. Brokerage accounts, like bank accounts, can be jointly titled.
Just remember, if your son becomes incapacitated or dies first, probate will likely be necessary. Also, even if you die first, probate will no… Read More