I was recently speaking with a couple from Murfreesboro, Tennessee following one of our educational events, and they had a question about jointly held bank accounts and transfer-on-death (TOD) designations. This husband and wife couple told me that they had three children, two lived out of state and one lived locally here in Tennessee. This family wanted to know if they put their son who lived locally on the bank accounts and on the title to their home, could they avoid probate even without a revocable living trust.
This is a very common question that I answer. Many, many families believe that they can avoid probate and make things simple for their family by simply doing estate planning on their own and retitling their assets. However, this is a very dangerous and damaging decision to make without the advice of an experienced estate planning and estate settlement attorney.
First, it is true that many types of financial accounts have the ability to list beneficiaries. Therefore, when you die, so long as the beneficiary forms have been properly completed and the named beneficiary is alive when you die, the beneficiary that you name automatically gets access to the accounts and the financial account will pass outside of probate.
Second, you can name an adult child on your bank accounts and financial accounts as another person that has access to the accounts. If this were to occur, and both you and your spouse passed away, the adult child, as another person signed on to the account, would continue to have access to the account and be able to pay all of your final bills and funeral expenses.
However, I cautioned this family that this type of planning has the potential to cause unnecessary fighting among the surviving family members. I spoke with this husband and wife couple and said that they could put their adult son, who lives locally, onto the bank account with them so long as they trust their adult son. I explained that once he is on the bank account, there is no restriction from him accessing the bank account without their consent or even their approval.
In addition, I said to this husband and wife couple that should they both pass away, this adult son would automatically have access and be given control of the entire bank account. Also, I told this husband and wife couple that they could name this adult son as transfer-on-death designee and he would automatically be given access to the bank account at death. However, this son would be under no obligation to split the assets of the bank accounts with the two other siblings as he was the sole beneficiary or TOD designee on the bank account.
I explained to this husband and wife couple, that for this reason, many of our clients decide to put a revocable living trust in place and have the trust administer all of the family assets ensuring a smooth and easy transition after death to the adult children and surviving family members.
If you have questions about estate planning in Tennessee, establishing a revocable living trust or irrevocable Medicaid trust, avoiding nursing home poverty and Medicaid planning, or any other estate planning topics, then I encourage you to attend one of our free live educational events scheduled this month. At these events, you will hear a lot of real life stories about families that paid thousands of dollars in unnecessary expenses, families that were able to avoid unnecessary expenses, and families that were able to protect their assets from unnecessary nursing home costs and expenses.
I look forward to speaking with you at one of our upcoming live educational events!