When a person passes away in Washington, their estate’s financial matters may be resolved during the court process known as probate. This can be expensive and time-consuming. However, there are estate planning measures that can minimize probate or avoid it all together. These include payable on death accounts and transfer on death deeds, which can pass property or assets directly to beneficiaries while allowing the owners to retain exclusive control during their lifetimes.
A payable on death (POD) account includes a direction that a chosen beneficiary will receive the funds at the time of the account holder’s passing. A savings bond, certificate of deposit or share account can also be made payable on death to a beneficiary. Arrangements can be made directly with the bank or financial institution.
A POD account is significantly different than a joint account, in that the designated beneficiary has no access to the funds while the account owner is alive. In addition, the beneficiary can be changed by the owner at any time.
While a POD account can avoid probate for monetary assets, it cannot be used to transfer personal property such as vehicles, jewelry or other physical possessions.
Neither can a POD account be used to convey real property. However, a transfer on death (TOD) deed can serve that purpose. Under a TOD deed, a designated beneficiary automatically takes ownership of real estate upon the decedent’s death without having to go through probate.
The instrument must satisfy the legal criteria for a deed, specify that the property transfer will occur at the time of the owner’s passing and be properly recorded prior to the owner’s death. The advantages of a TOD deed are that the owner can:
- Name multiple or contingent beneficiaries — This covers the possibility that one beneficiary may pass prior to the property owner’s death.
- Retain control over the property — During the owner’s lifetime, the beneficiaries have no right to the real estate except as the owner may permit.
- Transfer real property easily — The beneficiary is only required to record the death certificate to transfer the property, rather than having to record a new deed.
- Revoke the deed at any time — If the owner changes their mind, the TOD can be revoked by recording a revocation.
It’s essential to understand that even if you use a POD account or a TOD deed to convey some of your property, those assets may still be subject to creditors’ claims during your lifetime and after your death.
When you’re planning your estate, it’s essential to work with an experienced attorney who can help ensure your wishes are carried out. Bottimore & Associates, P.L.L.C. has been advising clients on estate planning matters throughout Washington for more than 20 years. Call 253-272-5653 or contact us online to schedule a consultation at our Tacoma office.