8 Ways to Avoid Probate - Softcover

Randolph, Mary

Softcover

ISBN 10: 1413308570 ISBN 13: 9781413308570

Publisher: Nolo, 2008

Synopsis

Suggests methods for avoiding probate court, including setting up payable-on-death bank accounts, naming a beneficiary for retirement accounts, registering stocks in transfer-on-death forms, and creating a living trust.

About this title

About the Author

Mary Randolph is also the author of The Executor's Guide, Every Dog's Legal Guide and Deeds for California Real Estate. She has been a guest on The Today Show and has been interviewed by many publications, including the Wall Street Journal, the Los Angeles Times, the San Francisco Chronicle, and more. She lives in the San Francisco Bay Area with her family.

Excerpt. © Reprinted by permission. All rights reserved.

Introduction

Payable-on-death bank accounts offer one of the easiest ways to keep money--even large sums of it--out of probate. All you need to do is properly notify your bank of whom you want to inherit the money in the account. The bank and the beneficiary you name will do the rest, bypassing probate court entirely. It's that simple.

This kind of account has been called the "poor man's trust." The description is apt (if sexist) because a payable-on-death account does accomplish for a bank account--for free--exactly the same result as would an expensive, lawyer-drawn trust.

As long as you are alive, the person you named to inherit the money in a payable-on-death (P.O.D.) account has no rights to it. If you need the money, or just change your mind about leaving it to the beneficiary you named, you can spend the money, name a different beneficiary, or close the account.

Payable-on-Death Accounts at a Glance

Pros

They're easy to create.
There's no limit on how much money you can leave this way.
Designating a beneficiary for a bank account costs nothing.
It's easy for the beneficiary to claim the money after the original owner dies.

Cons

You can't name an alternate beneficiary.

Payable-on-Death Account or "Totten Trust"?

Payable-on-death accounts go by different names in different states-- and sometimes in the same state. Your bank, for example, may respond to your request for a payable-on-death account by handing you a form that authorizes the creation of something called a "Totten trust." Payable-on-death bank accounts are also sometimes called tentative trusts, informal trusts, or revocable bank account trusts.

"Totten trusts" are really just payable-on-death accounts. The name comes from an old New York case (Re Totten), which was the first case to rule (in 1904) that someone could open a bank account as "trustee" for another person who had no rights to the money until the depositor died. Other courts had balked at this, objecting that such an account was tantamount to a will, which had to fulfill detailed legal requirements to be valid. The Totten court called the account a "tentative" (revocable) trust.

After this decision, courts in many other states adopted the idea of Totten trusts. Later, state legislatures enacted statutes authorizing payable-on-death accounts, specifically addressing many of the questions that had sprung up about Totten trusts. For example, some statutes state exactly how you can change a payable-on-death designation.

Edition details

• Publisher: Nolo
• Publication date: 2008
• Language: English
• ISBN 10: 1413308570
• ISBN 13: 9781413308570
• Binding: Paperback
• Number of pages: 274