Estate Planning – Avoiding Probate – Account Designations

by Frie, Arndt & Danborn

Estate Planning – Avoiding Probate-Transfers of Assets Outside Probate

Survivorship Interests

Holding property with another under a survivorship interest such as joint tenancy is sometimes used as an inexpensive alternative to a will or trust. A survivorship interest may be applied to both real and personal property. However, there are large pitfalls to this transfer method, both during life and at death, including problems with creditors, taxes and lack of control. Also, a will is still necessary in the event both joint owners die simultaneously. (See Chapter 7, Part II, for more information on survivorship interests and options to joint tenancy such as life estates.)
Payable On Death (POD) & Trustee Accounts

POD and trustee accounts are other alternatives to wills and intestate succession for bank accounts. Such accounts are treated like a normal bank account during the lifetime of the account owner (sometimes called the trustee). On the account owner’s death, any funds in the account will be automatically distributed to recipients (the beneficiaries) designated by the account owner. The beneficiaries have no control over the account during the owner’s lifetime. Contact your bank if you wish to set up an account in this manner. Before doing so, however, remember that there are pitfalls to this transfer method, just as with survivorship interests.

Securities Registered to Transfer On Death (TOD)

This device for transferring stocks and bonds at death to named beneficiaries works like a POD bank account. It has similar advantages and disadvantages.
Beneficiary Deed

Title to an interest in real property may be transferred on the death of the owner by recording, prior to the owner’s death, a beneficiary deed designating a beneficiary. The transfer is effective only on the death of the owner, and owner can revoke or cancel a beneficiary deed by recording a proper revocation prior to the death of the owner.

The attorneys in our office are more than happy to assist you review and setup your account beneficiaries in a manner that is best for you and your heirs.  Please give us a call to schedule an appointment.

This article courtesy of the Colorado Bar Association.