We’ve all been there: when you set up a new account or review your investment or retirement accounts they always ask you to list beneficiaries of where the money should go after you die. People often don’t give it as much thought as they should. Those beneficiary designations mean that the money in those accounts will not go into your probate estate. Instead, it will be distributed directly to the people you have listed.
Accounts with beneficiary listings like a POD or a TOD are not included in your probate estate. This is because they transfer by contract outside of your estate. This is a good thing. It means that the beneficiaries can get the money faster (usually) and that creditors don’t have access to the money. It is very common to not understand the difference between probate and non-probate assets. Even lawyers struggle with this concept.
Anything that was only in the name of the decedent, and that did not have a beneficiary listing. This usually includes real estate, the contents of the home, checking and savings accounts, personal property, and contents of safe deposit boxes. It would also include any precious metals or other cash in the home. These assets are included in any probate filing.
Accounts that transfer through a beneficiary listing (POD or TOD) directly to those who are to inherit are considered non-probate assets. If an account or real estate was jointly titled, then it is also not a probate asset. This means that you do not account for them in the court paperwork, and they are not subject to creditor’s claims (usually).
POD stands for Pay on Death, and TOD stands for Transfer on Death. This means that the money in the accounts should be paid to the listed people after the owner’s death.
Does that mean that I don’t have to deal with the non-probate assets? NO! Your job as the personal representative is to gather and distribute all assets that the decedent owned. This means that you need to reach out to the companies and do the necessary paperwork. If there is a jointly owned property then there is work to do to remove the decedent from the title. While it’s important to distinguish between the two types of property, it does not remove your duties.
Contact Us for a consultation to put your mind at ease. Our legal teams of dedicated attorneys and paralegals will help you with compassion and care. We understand how overwhelming all of this is, and are here to help you.