People who are creating estate plans often think about the will, trusts and power of attorney designations. What they might not realize is that not all assets are handled by the estate plan. Some of the financial accounts that you have are covered by another method of passing them along if you pass away. This is the payable on death designation.
What accounts have a payable on death designation?
Some accounts, including checking and savings accounts, have a payable on death designation. When you open the account, you have to name the person to who you want the account to go to. This is also the case for retirement accounts. On life insurance accounts, you name the beneficiary of the policy.
Do you include those accounts in your estate plan?
You don’t have to include any of these accounts in your estate plan. They are handled strictly according to the payable on death documents if you pass away. Because of this, you must ensure that these designations remain up to date.
It’s a good idea to review the payable on death designation when you go over your estate plan. This should occur every couple of years, but also needs to happen if there are major life changes in your life, such as getting married, going through a divorce or having a child.
Your attorney can help you ensure that your estate plan accurately reflects your goal. They should also go over the plan with you periodically to determine whether anything needs to be changed. It’s imperative that you work with an attorney who’s familiar with these matters.