What Happens to My Investments When I Die?
What happens to my investments when I die? You may have written a Will or set up a trust, but what happens to those when you pass?
Many people do not realize the effect that decisions, or non-decisions, made while you are alive have wide-ranging impacts on the people you leave behind. You may have written a Will or set up a trust, but how you hold your financial assets can make a big difference in what happens to those assets when you die, whether you have a Will or not.
Is it safe to assume that when you die, your investments will sort themselves out?
The people you leave behind still have bills to pay and expenses to cover. It’s important for you to understand the steps you can take now to make things easier for your loved ones when you’re gone.
Your bank and investment accounts are assets that often become part of your estate when you die. If you let that happen, their distribution will be governed by your Will after the Will goes through probate. This can be a time-consuming process and leave your family without access to needed funds. But there are steps you can take in the way the ownership of your accounts is structured that can keep those assets out of the probate system and allow them to be immediately available to your chosen recipients when you die.
Bank Accounts
When you are dealing with liquid assets, such as demand deposit accounts, certificates of deposit, or other bank-based accounts, how the accounts are held is of primary importance. If your accounts are jointly owned with a right of survivorship, the funds in those accounts immediately become the property of the surviving owner at your death. So, if you and your spouse have a joint checking account with a right of survivorship, and one spouse dies, the money in that account is now the property of the remaining spouse without further intervention. If the surviving spouse wants to close the account, they may be required to present proof of death, but the account does not have to go through probate.
Bank accounts and bank-issued financial instruments (like CDs) can also be designated as “payable on death” accounts. With this type of account, you designate a beneficiary who will take full ownership of the account when you die. If the account is a joint account, this would take effect at the last of you to die. If the account is set up this way, the beneficiary needs only to present proper identification and proof of death to take possession of the funds in the account. It does not become part of your estate at any point. While you are still living, your named beneficiary has no power of ownership over the account. You can use the funds anyway you choose, change the beneficiary whenever you want, or even close the account.
It is important to note that, in the case of joint accounts, once the ownership is held by a surviving account holder, there is nothing to stop them from changing the beneficiary (or beneficiaries) on the account. For instance, if you remarry and your joint account is set up as a payable on death account to go equally to all children in a blended family, there is nothing to stop the surviving spouse from changing the beneficiary to only their children once you’re gone. In cases like this, it is likely a better idea to handle the distribution through other estate planning methods. The experts at Siedentopf Law can help you work through the complex dynamics of your particular situation. Schedule a consultation appointment today.
Investment Accounts
Investment accounts can be set up in much the same way. These accounts can be set up as “transfer on death” accounts. Much like their bank counterparts, your beneficiary needs only to present identification and proof of death to take ownership of the account. There is no need to go through probate. Like bank accounts, it’s very important to keep your beneficiary designations up to date.
While there are a few states that allow a transfer on death designation on real estate, until recently Georgia was not one of them. Many people know that Georgia did not recognize this type of transfer on death designation for real estate, called a Ladybird Deed. However, in July 2024, Georgia legislature passed a new law recognizing transfer on death deeds as valid in Georgia. This means that you can now designate real estate to pass at your death— avoiding probate— using a Ladybird Deed. It is important to note that in many cases a Ladybird Deed is not the best choice for an estate. Even given the law change a Trust may still be the best way to distribute property. This is why it’s crucial to work closely with a skilled estate planning attorney.
More on the Importance of Proper Estate Planning
The Importance of Beneficiary Designations
In both payable on death accounts and transfer on death accounts and deeds the designations of beneficiary supersede anything set out in your Will. This means that your Will only governs what is considered part of your probate estate, and since these accounts do not go through probate, they are not governable by your Will.
If you neglect to set up a payable on death or transfer on death beneficiary on your accounts, or if the person you named predeceases you, your account will be treated as part of your estate and will be subject to probate. It is vitally important for you to keep these designations up to date.
To learn more about how payable on death and transfer on death accounts can be an important part of your estate plan, contact Siedentopf Law for a consultation.
What is the Best Way to Ensure Your Wishes are Carried Out?
The ins and out of probate law vary greatly from state to state. To make sure that every part of your estate plan works together seamlessly and to ensure that your vision for your loved one’s future is achieved, it is imperative that you work with a knowledgeable estate planning attorney that knows the ins and outs of estate and probate law in your state. The experts at Siedentopf Law can guide you through the important decisions that you need to make to get your plans in order. Set up a consultation today to begin this journey with our team by your side.
