Using A Beneficiary Designation To Avoid Probate

When people open a bank account, they complete many forms. These ask for the names of the owners on the account, those with signing authority, and the beneficiaries of the account in the event that the original owner passes away. The person you name on the beneficiary designation form will receive any funds remaining in the account upon your death.

Retirement accounts, life insurance, and other financial products also have beneficiary designations. These designations are very important, as they can help your loved ones avoid the probate process after you pass away. Below, our St. Petersburg estate planning attorney explains in more detail.

How Does a Beneficiary Designation Avoid Probate? 

After a person passes away, any of their property considered to be a probate asset must be administered through the probate court. Probate assets are considered any property you solely own. For example, if you own a home or business that is in your name alone, they are considered probate assets. If you own a bank account or other financial account and it does not have a beneficiary designation, it is also considered a probate asset.

On the other hand, if you have designated beneficiaries for these accounts and the beneficiary survives your passing, these products are not considered probate assets. Instead, the financial institution or insurance company will transfer the funds directly to your beneficiary outside of the probate process.

In most cases, financial institutions will require a death certificate and identification to confirm the beneficiary is who they say they are, and that the original owner has passed away. Once this information is confirmed, the bank has an obligation to distribute the remaining funds directly to the beneficiary, or they can be sued for breach of contract.

Beneficiary Designations and Wills 

When people get married, divorced, or experience another major life event, they often change their last will and testament to reflect their new wishes. However, they also often forget to change their beneficiary designations, and this is a serious mistake.

The property in a last will and testament is distributed according to the probate court. The court does not oversee the distribution of accounts with beneficiary designations. Instead, only contract law governs beneficiary designations. Due to this, if you fail to change your beneficiary designations, they will take precedence over your will. This may result in your last wishes not being fulfilled if, for example, you named your former spouse as a beneficiary but have remarried since that time.

Our Estate Planning Attorney in St. Petersburg Can Review Your Plan 

If you have an estate plan in place, it is important to review and update it periodically to confirm that it still reflects your wishes. At Legacy Protection Lawyers, LLP, our St. Petersburg estate planning attorney can provide the legal advice you need, determine if you need to make changes, and ensure they are made correctly so you and your loved ones are protected. Call us now at 727-471-5868 or contact us online to request a consultation and to get the help you need.

Source:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0733/0733ContentsIndex.html