Payable on Death accounts are dangerous if not used properly.
There are a number of estate planning tools at your disposal.
Each has its benefits.
They can also be detrimental, if not used correctly.
According to a recent Justia report on a case titled “Coe v. Schick,” the Payable on Death account was facilitated some unfortunate unintended consequences for the estate.
Basically, it is an arrangement between a bank and a customer.
Instead of the account going through probate, it can be automatically transferred to the Pay on Death beneficiaries as new owners.
What happened in this case?
The decedent purchased a bank account and a Certificate of Deposit (CD) in the name of his trust.
He named his granddaughter as the Pay on Death beneficiary.
His pour-over will and his trust left his assets to his children Bill and Bonnie.
A bank was named the trustee of the estate after the death of the decedent.
This bank moved this CD and checking account to a new trust account.
Jennie, the granddaughter, disputed this in probate.
The bank account and CD transferred automatically to her independent of the pour-over will or trust.
The court determined the Payable on Death account was not valid.
A trust cannot die.
The court also found the account to be a joint account.
Jennie did not have a claim to the CD or bank account.
This oversight cost more than 8 years in litigation and upwards of $75,000 in legal fees.
Working with an experienced estate planning attorney in your estate will help you to avoid mistakes like these.
So, how do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Justia (June 29, 2018) “Coe v. Schick”