Houser Firm

Why people use transfer-on-death paperwork for financial accounts

On Behalf of | Nov 23, 2023 | Estate Planning

Holding financial resources in accounts is beneficial for someone who is accumulating wealth. They have deposit protection provided by the federal government so long as they bank with an insured financial institution. They are at lower risk of a robbery that significantly depletes their personal wealth. They can also accrue interest on the balance of the account.

Some people hold a significant portion of their personal wealth in financial accounts. They may understandably worry about what will happen with those resources when they die. Filing transfer-on-death paperwork with a financial institution is one common way of managing what will happen to resources after someone’s death.

How transfer-on-death paperwork helps

Typically, the financial assets held in someone’s name would become part of their estate when they die. The balance of the account would be subject to creditor claims during the probate process. It can therefore be months or likely more than a year before the funds in the account would transfer to someone’s chosen beneficiaries.

People can drastically speed up that process by keeping the account balance out of probate. If someone has previously filed a transfer-on-death document for a specific account with their financial institution, the beneficiary does not need to wait for probate court. They can take proper identification and a copy of the death certificate to the financial institution. They can then assume control over the account without it passing through probate.

Transfer-on-death designations protect resources from creditor claims in many cases and can diminish the total value of someone’s estate to reduce potential estate tax obligations. As a result, learning more about this resource – and other estate planning approaches as well – can be beneficial for many adults who safeguard assets in financial accounts.