The importance of establishing a estate plan is known to individuals in Texas; however, many will put this task off until later in life. The reality is that individuals own assets and property right now, regardless if it is much or holds much value. If one were to pass without going through the estate planning process, this could mean property and accounts going to those an individual does not wish.
Estate planning and bank accounts
While certain assets are more prone to disputes after a person passes, bank accounts are known to cause them. How an individual fills out an account when he or she opens it and what name he or she puts on the account will help determine who will own the account after the individual dies.
Commonly, individuals believe that they has opened an account in his or her name alone, meaning that it will pass to the beneficiaries they named. However, it is quite possible that the account is a joint account with a spouse, causing the joint owner to take control of the account. It is also possible that they named a payable on death designee. In either case, this means that either the joint owner or designee will receive the monies and the persons named in the will receive nothing.
Protecting bank accounts
In order to avoid unintended consequences with regards to one’s bank account after he or she passes, there are five steps an individual could take to better protect their bank accounts. First, they should understand the legal consequences of naming a payable on death designee. Many decide to do this because they are informed that this will help them avoid probate; however, they are often unaware that this means that these funds will not pass onto their will or trust. Second, consider the consequences of naming a joint owner when it is just out of convenience.
Next, consider the fact that a joint owner has the ability to clear out the account at any point in time. Fourth, consider modifying the language of a will to incorporate a joint account, establishing that it was out of convenience during one’s lifetime and clarifying the intentions with the account after he or she passes. Finally, consider establishing a trust through a lawyer versus a bank. A bank is likely to create a Totten trust, which is essentially the same as a payable death designation.
As soon as one acquires assets and property, he or she should consider ways to protect them. Establishing an estate plan is an important step to take, and putting it off until later in life could be detrimental. One never knows what the future hold, so protecting one’s accounts and assets is imperative.