In this Elder Law Minute, Kaye DeSelms Dent explains why payable-on-death accounts can undermine equal distributions and proper long-term estate planning.
Hi, I’m Kaye DeSelms Dent with Dent Coulson Elder Law here with an elder law minute for you. These videos are intended to educate you about the elder care journey which begins earlier in life than you might think. We hope that you find them useful and if you have further questions, please call us at Dent Coulson Elder Law.
Payable on Death and Transferable on Death Accounts
Today I’m going to chat with you about um payable on death or transferable on death accounts.
I often have people tell me that they’ve got everything set up as payable on death. They don’t have to worry about anything. They don’t need a will. They don’t need a trust. And I like to walk that back with people because in rare circumstances it’ll work just fine. But for a lot of people it’s not going to work out exactly as they planned.
Why Equal Accounts Rarely Stay Equal
I’ve seen situations where people say, “Well, I have six accounts and six kids, so I’m going to put one kid on each account.” And the problem is that as you age, your care needs increase. You may need to go into long-term care. Your costs may increase and sooner or later things may get spent down.
It’s very unlikely that you’re going to think about doing things this way or somebody acting on your behalf like an agent under power of attorney or a guardian is going to think, boy, we need to spend exactly the same amount out of each account so that all of these accounts are equal at death and everybody gets an equal share because the same people inevitably want each of those six kids to be treated equally.
That’s not going to happen easily if you do a payable on death account to each kid.
Special Needs Are Not Considered
As well, payable on death accounts don’t take into consideration people’s special needs.
What if one of your children is disabled on public benefits in long-term care at the time that you pass away?
That does happen because remember, we have an aging population. If you pass away in your 80s or 90s, your kids are easily going to be in their 60s or 70s.
You might um have already lost a child by the time you pass away. And that’s that child’s children might, you know, be entitled to their share of your estate. One of those children might be disabled.
If you have disabled descendant or descendants, you need to make special provisions for them in your estate plan, which payable on death and transferable on death don’t do.
Why Outright Distributions Can Cause Problems
Those are outright distributions that might come at a really bad time for people and things may not just end up exactly the way that you intended.
How Consultations Help
So when we consult with people, we like to talk about your entire situation, the pitfalls of just leaving things outright. In many cases, that can be fine. But the way people often have their designations set up doesn’t give the results that they intend because they just simply don’t understand how these things might actually play out.
And that’s the type of thing that we discuss in a consultation. We’d be happy to consult with you about your estate planning needs and goals and how to make sure that your goals are properly set out and properly executed when you pass away or when you become disabled. Please give us a call today at Dent Coulson Elder Law.
We Are Here to Help
Dent Coulson Elder Law is here to help you with nursing home and other living situation contract reviews. Call us today.
If you have any questions, give us a call at Dent Coulson Elder Law. Thank you.
“Your Trusted Advisor on the Elder Care Journey”
Dent Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older.
Learn More about legal guardianship from the American Bar Association
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“Your Trusted Advisor on the Elder Care Journey”
Dent-Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Dent-Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (618) 632-7000 (IL) or (314) 567-9292 (MO), or Contact Us and we will get in touch as soon as possible.