Will Payable on Death (POD) or Transfer on Death (TOD) Avoid Probate?

The answer is maybe.

There are two types of probate, a Living Probate and a Death Probate. To best illustrate both probates, here are two examples.

1) Sally is 42 years old and while driving to work gets into a car accident which leaves her in a coma. Sally is unable to make her own healthcare or financial decisions. Two years before the accident Sally filled out a POD form at her bank leaving the account equally to her 3 adult children. Will the POD form avoid a Death Probate? Yes, eventually when Sally dies; however, Sally is still alive, and unless she previously executed a Power of Attorney that the bank will accept, there will need to be a Living Probate initiated whereby a Conservator is appointed to manage the bank account on behalf of Sally.

Unfortunately, even with a properly executed Power of Attorney, a financial institution could require additional paperwork to be signed by Sally (who is unable to because she is incapacitated), and a Conservatorship would need to be filed with the courthouse.

2) Sally is 85 years old and dies in her sleep. Two years before she died, Sally filled out a POD form at her bank leaving the account equally to her 3 adult children. Will the POD form avoid a Death Probate? Yes, the account will be distributed equally between her 3 children, outside of a probate proceeding.

However, with the same facts, but 1 of the 3 children is a minor. Same result? No, the minor will not be able to receive the funds until he/she reaches the legal age of eighteen; a Conservator will have to be appointed by the court to be in charge of the funds until the minor reaches eighteen.

Same original facts, but 1 of the 3 children is receiving government benefits for special needs. This new inheritance will force the government benefits to cease until the inheritance is used up; and then a new application for government benefits would have to be initiated.

As these two simple examples illustrate, estate Planning involves planning for today while we are still alive, and also planning when we pass away. If you are over the age of eighteen, you should see one of our estate planning attorneys to discuss how we can help you and your family avoid both a Living and Death probate.

What the Attorneys of Morris Hall Can Do For You:

The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down.  The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits.  Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.