As an Atlanta probate attorney, I have had many clients who were left confused and frustrated by the probate process because of the deceased’s misunderstanding about which of their assets would pass through probate and which were bound to other routes of distribution. This can be particularly confusing in the case of bank accounts, life insurance accounts and retirement accounts. There are many different kinds of accounts, with many different kinds of beneficiary arrangements, some of which supersede the arrangements laid out in a will. It is important to understand these different beneficiary arrangements when making your estate plan so that your assets can be distributed as intended.
Some fiduciary institutions and insurance companies require a beneficiary designation. This specifies who will receive assets like retirement accounts or life insurance proceeds, which are not bound by wills or trusts. Some accounts will readily allow you to designate any beneficiary you choose, while other accounts require a few more hoops be jumped through if you would like to designate someone other than your spouse as beneficiary. Be sure to update your beneficiary information if anything changes in your personal life (i.e., if you get divorced or have children). Otherwise, your intended beneficiaries could be in for a disappointing surprise when it comes time to distribute your assets. This New York Times article recounts the story of a woman who got married when she was older and failed to update her beneficiary information before becoming abruptly ill and passing away. Although her will outlined which assets she wanted left to her husband, the unchanged beneficiary designations to other family members on her life insurance and retirement accounts superseded her will.
You should also be wary of joint accounts. Joint tenancy with rights of survivorship, or JTWRS, is an arrangement in which two people have equal access to a bank account, and when one tenant dies, the other receives all the assets. Although a joint account may be useful for spouses who do indeed share their money, it can present unexpected hazards. For instance, either name on an account can withdraw all of the money in the account without any notice to the co-owner. JTWRS can also present issues by exposing one tenant to the other’s debts and liabilities.
An alternative to joint accounts is assets which are payable or transferable upon death. A person may have their bank account designated as “transferable upon death” to a beneficiary. While the designator is alive, the designee cannot access their bank account. However, upon the designator’s death, the designee can collect the money directly from the bank.
As a Georgia probate attorney, I know that a person should be very careful in arranging for the distribution of their assets so that everything gets distributed in the manner intended. Having a well thought out estate plan is paramount, and it is prudent to consult a lawyer who can counsel you in the intricacies of estate planning. If you would like assistance with your estate plan, you can either email me or call my Atlanta estate planning firm at (404) 445-7771.
