Legal Advice

NON-STRESS PAY ON DEATH DESIGNATIONS

To avoid probate, beneficiary designations work well for accounts and real estate, if you are leaving assets to a few people or charities. Without a beneficiary designation or trust, you can avoid probate only if the assets do not exceed $100,000 of real property, $75,000 in personal property (cash, accounts and tangible personal property), or you do not expect more than $5,000 in wages in the year after your death. For accounts, there several terms used: pay on death pay on death (or “POD”) or transfer on death (or “TOD”). For IRAs and 401ks, the terms “designated beneficiary” is used.

Financial institutions do not use the terms POD and TOD interchangeably. If you use one of the terms and are told that the bank does not have that type of designation, then ask for the other type of designation, or even ask whether any beneficiary designation is available.

Remember never to list a minor on a designation for POD, TOD or IRA type account. A minor cannot receive more than $10,000 in a year without a court conservatorship; which is more costly than a probate and distributes the funds when the child reaches 18. In such cases, a revocable trust and Will are more effective and less expensive.

Sharon Ravenscroft, Esq., The Cavanagh Law Firm, PA, Sun City and Phoenix offices, (623) 815-7451 or Sravenscroft@CavanaghLaw. com. Sharon’s practice focuses on Wills, trusts, probate and trust administration. For more information www. sharonravenscroft.com.