Have you ever wondered what happens to all your accounts when you die?
I mean… who gets it, legally? In today’s article will discuss the different ways in which we pass things that we own on… Either intentionally or unintentionally.
Accounts such as bank and investment accounts pass on based upon how they are titled or registered.
IRA. 401(k), Annuity accounts: These accounts will pass according to the beneficiary designation elected. It is important to review all these accounts to ensure that proper beneficiary designation forms have been completed. For example, earlier last week I reviewed a 401(k) statement that said “no beneficiaries have been designated on this account”. In a circumstance such as that, the account would pass into the estate/probate of the deceased and its distribution would be according to the laws of intestate in the state of California.
Non-retirement individual accounts: You may have an account in your name that is not jointly held. If you have not completed a beneficiary designation form on the individual account, the proceeds will go into the estate/probate of the deceased. Make sure that for all individually held accounts (investment or bank) that you complete the “Transfer on Death” or “Pay on Death” form. Many times you must request that form as it is not an automatic.
Non-retirement joint accounts: Jointly held accounts will pass automatically at the death of one of the owners. This is helpful, but it doesn’t cover two common issues that come up. One, both owners could die simultaneously and without a backup beneficiary, go into the estate/probate. Two, the title automatically changes to the survivor owner but the survivor forgets to set up a new beneficiary… Causing the proceeds to go to the estate/probate at their own death.
If you have questions about titling or ownership, I highly recommend that you speak with a qualified estate planning attorney.