ARTICLE: How Can Beneficiary Designations Work within My Estate Plan?

How Can Beneficiary Designations Work within My Estate Plan?

A beneficiary designation is a simple way to pass on wealth. In reference to financial accounts, it’s usually referred to as “Payable on Death.” In reference to investment accounts, it’s usually referred to as  “Transfer on Death.” This article is focused on payable on death bank accounts. Although the specific rules and procedures may vary from state to state and institution to institution, here’s a general look at bank accounts with a payable on death clause.

When you open a new bank account, you can set up a pay-on-death designation. If you want to add this beneficiary designation to an existing account, your banking institution can help you with the process. It’s typically a simple process, of showing your own identification and providing the beneficiary’s information, and you may even be able to handle the whole process online.

It’s important to know that you maintain complete control of a bank account with a beneficiary designation during your lifetime. There’s no requirement to leave any amount in the account for the beneficiary, and the beneficiary has no access to the account while you’re alive unless you also set up the designated beneficiary as a cosigner. Further, you can change the beneficiary designation at any time while you’re alive. Regularly reviewing and updating your beneficiary designations is important.

When you pass away, the account transfers to the designated beneficiary with minimal effort. Usually, the designated beneficiary just needs to provide the banking institution with your death certificate and prove their identity.

A beneficiary designation keeps the bank account out of the probate process. Largely for this reason, designating a beneficiary on a bank account typically prevails over any will designation. Even more, beneficiary designations typically take priority over trust and other agreements, including a divorce agreement or a prenuptial agreement.

A beneficiary designation is a timesaving way to transfer some wealth to your loved ones. This way, they’ll be able to take care of expenses and obligations as they arise after your death. This may not be the way you want to pass along a significant amount of your estate if you’ll need to take advantage of the strategic benefits of a comprehensive estate plan such as tax planning and asset protection.

Work with a New York Estate Planning Attorney
We can help you determine how to best use designated beneficiaries as part of your comprehensive estate plan. Call Roth Elder Law, PLLC today to schedule an initial meeting at 607-962-6162 or complete this intake form and we’ll be in touch.

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We at Roth Elder Law, PLLC, believe in providing services in a way that clients can easily understand and meaningfully participate in designing and maintaining their estate plan for their loved ones, as well as be assured that their plan will be administered according to their wishes.