Once you pass away, there are various things that could happen with your bank account. Much of this can depend on how you have your account set up. Whether or not you have a will or trust can also make a difference. The important thing is that you take action to make sure the funds in your bank account will be distributed to the beneficiaries you prefer.
Naming beneficiaries
One of the simplest ways of ensuring that the money in your bank account goes to your designated heirs is by naming your beneficiaries on your account ahead of time. Through your bank or financial institution you can name what is known as payable-on-death (POD) beneficiaries. These are special types of beneficiaries which allow them to bypass the probate process in order to obtain the funds in your bank account directly in the case of you dying without having a will or trust in place.
Create a will
Having a will provides guidelines on how you want your assets, including money in your bank account, distributed after your death. Although a will does not guarantee your heirs will avoid the lengthy probate process, it will make the process significantly easier and straightforward.
Set up a trust
Another way to provide guidance on how you prefer your assets, including funds in your bank account, to be distributed is by setting up a trust. This type of legal instrument can help beneficiaries bypass the expensive and time-consuming probate process. However, there are different types of trusts which have their own advantages and disadvantages. A financial professional can explain your different options for setting up a trust.
Add heirs as account holders
Likely one of the easiest methods of ensuring your preferred beneficiaries receive the funds in your bank account is to add your heirs as joint account holders. Usually, joint account holders are classified as joint tenants with rights of survivors (JTWROS), therefore the account simply passes to your beneficiary joint account holders in the case of your death.
Although adding beneficiaries as joint account holders may make things simpler for estate planning purposes, it can also pose problems while you are still alive. This can be the case if
your joint account holders are not exactly responsible when it comes to managing money. Also, the money in the account will be considered in the possession of your beneficiaries for the purpose of determining qualification for government assistance programs. The funds can also be susceptible to creditors of your beneficiaries.
Consequences of doing nothing
If you have made no preparations regarding what happens to your funds in your bank account the account will have to go through the probate court process. The funds in the account and the rest of your assets will be distributed in accordance with state law if you have no estate planning in place at all.
This could prove costly to your preferred heirs and they may even end up not receiving your assets in the end. Therefore, you should do what you can to avoid this scenario by making sure you have a comprehensive estate plan in place.
Give us a call!
Making sure the funds in your bank account go to your preferred beneficiaries will require that you take some action. We at Rademacher Financial, Inc, are knowledgeable about planning and preparation. Please give us a call to discuss your options and how we can best serve you!
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