How Can I Make it Easier for My Heirs to Receive My Money?

Oct 4, 2021

Part of my annual review is to confirm my client’s beneficiaries.  I make sure they are correct; nothing has changed and that the client doesn’t want to make any changes.  For Individual Retirement Accounts, we look at the beneficiaries listed and for non-retirement accounts, we look at the “Transfer on Death” designation.

But what about accounts held outside of Pentas Wealth Management?  How can a client make it easier to pass on accounts to their heirs and avoid probate and other issues?

Let’s discuss bank and credit union accounts first.  I have had many clients tell me they have one of their kids on their bank accounts and that he/she knows to “split it up” when they die.  Did you know that child does not have to share that account with anyone?  By making them a joint owner of the account, its his/her money as well.  While a child may do the right thing and share it per his/her parent’s wishes, they have no legal responsibility to do so…even if it’s in your will.

Another issue with making a child a joint account owner is that account is now subject to creditors of the child.  Let’s say the child files bankruptcy, a portion of your bank account would be considered as an asset of that child and subject to creditors.

How should you handle bank accounts?  Stop by your bank and let them know you want to put a “Payable on Death (POD)” or a “Transfer on Death (TOD)” on each of your bank accounts.  List your heirs’ names, just as you would for an IRA, and a percentage for each heir.  This way, when you pass, the bank will honor your wishes and divide the money up per your designations.

If you have any outside brokerage accounts a 401k at work or any other type of investment or cash account, make sure you call each company and designate beneficiaries as well.  If you need help, just ask your financial advisor.

Authored by Jay Poole, AAMS®