The quickest way to undo an otherwise carefully-thought-out estate plan is the use of a bank, brokerage or retirement account. The reason for this is because the beneficiary designations on these accounts generally override a will. So, in theory, a wonderfully planned will can come undone due to carelessly named beneficiaries.

If you or someone you know has questions about estate planning, or is looking into creating one, contact a knowledgeable estate and will lawyer in Brooklyn who will advise you of your options under the law.

Unraveling Your Estate Plan 

In 2011, the Wall Street Journal issued an article, “Beware the Beneficiary Form”, warning about this exact situation. It is not uncommon for investors to avail themselves of the option of naming a beneficiary on a wide range of financial products to include bank accounts.

Different types of accounts can directly affect your estate plan. Moreover, financial institutions merge and records can be lost. It is imperative to know if you have designated beneficiaries and how it affects your estate planning – whether or not it’s been created.

What Kind of Accounts?

For more than five decades, United States savings bonds have had forms that allow a holder to name a beneficiary. Beyond this, bank accounts and certificates of deposit allow to name a beneficiary should the holder pass away. Known as “payable-on-death” (POD) accounts, these offer an easy way to keep money – even large amounts of it – out of probate court. All that needs to be done is to notify the financial institution who will inherit the funds once the account holder dies. This is sometimes known as “the poor man’s trust fund”.

Later, securities (including bonds, stocks, and mutual funds) have “transfer-on-death” (TOD) registrations that automatically transfer the securities to the beneficiary upon the holder’s death.

Beyond these, other financial instruments like life-insurance benefits and retirement-plan assets are paid directly to the named beneficiary on the account.

The reasoning behind POD and TOD accounts were to create an alternative to joint accounts – another financial device that bypasses probate and overrides a will. In this situation, when the co-owner of a joint account dies the funds automatically go to the remaining surviving owner.

Estate and Will Lawyer in Brooklyn

If you or someone you know is located in New York and is in need of estate planning advice, contact Alatsas Law Firm., where you will be represented by the best estate and will lawyer Brooklyn has. Do not attempt to figure out the planning of your will and trust alone – the law is complicated and you may inadvertently and unknowingly disinherit an heir. Call (718)-233-2903 today to schedule your initial consultation.

Ted Alatsas
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Trusted Brooklyn, New York Family Law Attorney helping NY residents with Elder Law and Asset Protection
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