Problems to Avoid with Transfer on Death Accounts
Transfer on death (TOD) accounts are a popular tool in estate planning, as they can have different benefits. Any account that has a TOD designation will transfer ownership right away without the need for probate. This can be highly beneficial for larger estates especially, but also save time and stress for families involved with smaller estates.
That said, there are things to consider so you can avoid certain problems with TOD accounts. To discuss your specific situation, speak with a Santa Ana estate planning lawyer directly.
TOD Accounts Do Not Replace Your Estate Planning Needs
You cannot simply add TOD designations to your financial accounts and property titles and expect your estate planning to be complete. Instead, you need to make sure that your TOD accounts are in accordance with California law and that they fit properly into your overall estate plan. Consider who will get the proceeds of your TOD accounts in relation to other property and assets that you have.
Some people name their minor children as beneficiaries on their accounts, though this can be problematic if you do not leave instructions for who will be in charge of the money (an adult) and how they should manage it for your child. In some cases, a living trust might make more sense than a TOD for minor children who are beneficiaries.
Consider Spousal Rights
Many people create joint TOD accounts or titles with their spouses, which can also be called joint tenants with rights of survivorship. This means that if one spouse passes away, the other will receive the property or assets immediately in full ownership. While this might seem like a good idea, it is not always the best one for those with children from previous relationships or other blended family characteristics. Discuss your overall estate plan objectives regarding your spouse and your children with an attorney before relying on a joint TOD or survivorship account.
Update Your TOD Designations
As with many aspects of estate planning, it can be tempting to put tools in place and then assume they will protect your estate and family for the rest of your life. But we all know that things happen, and if you experience any type of life event, changes to your assets, or changes to your preferred beneficiaries, you need to review and update your TOD accounts just like you would your will or trust.
Even if you do not have a major life event happen, you should still regularly review your entire estate plan, including your TOD accounts. It is all too easy to forget someone important or accidentally leave an ex-spouse as a beneficiary, who would then receive your assets.
Let a Santa Ana Estate Planning Lawyer Answer Your Questions
TOD accounts are useful, but they cannot achieve all of your estate planning goals. Discuss all of your options with a Santa Ana estate planning attorney at the Law Offices of Roshni T. Desai today. Contact us online or call 714.694.1200 to make an appointment and learn more.