When you first start to look into estate planning you may hear a lot of unfamiliar terms tossed about and feel yourself getting lost in a sea of complexity. For this reason, simple solutions may seem welcome, and with this in mind we would like to take a brief glance at payable on death accounts.
You may be able to start one of these accounts at your bank or your brokerage. The way that it works is you add a beneficiary or in some cases multiple beneficiaries when you open the account. Though your beneficiary does not have access to the resources while you are alive, after you pass away he or she assumes ownership of the assets that remain in the account.
This transfer of assets takes place outside of probate, a legal process that can be lengthy and expensive, and this is part of the appeal of these accounts.
The thing to remember when it comes payable on death accounts is that they are not a turnkey estate planning solution. There are often limitations with regard to how you may have the remaining funds distributed among multiple beneficiaries, and this is part of the problem.
A lack of any type of incapacity contingency is another drawback. And if you are looking for asset protection and/or estate tax protection you will have to look elsewhere.
The best way to proceed when you decide to plan ahead for the well-being of your family members is to sit down and discuss all of your options with a licensed professional. Just pick up the phone to arrange for an informative consultation with a licensed and experienced Covington KY-area estate planning lawyer.