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Blogs from September, 2022

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One of the most important aspects of estate planning is ensuring that your investments are transferred correctly after death. This can be a complex process, especially if you don't have a plan in place. That's why it's essential to work with a professional who can help you every step of the way. Our Dallas-Fort Worth estate planning attorneys discuss the process of transferring investments after someone passes away.

What Will Happen To My Investment After I Pass Away?

When someone passes away, their executor is responsible for handling the transfer of their investments. Investments are transferred to beneficiaries after the testator's death. There are generally three ways to ensure that your investment assets are transferred after death:

  • Transfer on death (TOD) registration
  • Trust accounts
  • Probate process

Read on to learn more about your options.

Transfer on Death (TOD) / Payable on Death (POD)

TOD/POD registration is available for most types of investment accounts, including:

  • 401(k)s
  • IRAs
  • Brokerage accounts
  • Life insurance policies

With TOD/POD, you can fill out a form with your investment company to designate a beneficiary for your account. This designation is revocable, meaning you can change the beneficiary at any time. When you die, the recipient should receive the asset. Notice, we say should and not will. Our firm always has numerous probate cases in which a TOD/POD was "supposed to work" and didn't. Why is that? Three common reasons are:

  1. Software error at financial institution. Whether it be a software upgrade or two businesses merged and used a new software system, designations are lost and institutions will require judge's orders to release the monies.
  2. Designation of a minor. A person is NOT allowed to receive an inheritance until they reach 18 years old. 
  3. The default rule of law is to have judge's orders before releasing assets from a decease person's estate. There is NO law that says a financial institution has to honor TOD/POD designations. So, if there are ANY questions at all institutions are well within their rights to ask for judge's orders before releasing money. 

    Trust Accounts

    Trusts are arrangements in which property is transferred to a trustee, who manages the assets for the benefit of the beneficiary. Trusts can be either revocable or irrevocable. Learn more about trust on our website.

    With a revocable trust, you can change the terms of the trust at any time and even dissolve the trust entirely. In contrast, an irrevocable trust is a permanent arrangement that cannot be altered without the beneficiary's consent.

    Trusts can be used for various purposes, including estate planning and customizable asset distribution. Regarding investments, trusts can be set up so that a trustee manages the assets to benefit the beneficiaries. This can help avoid probate and ensure that the assets are distributed according to your wishes.

    Crain & Wooley is Committed to Protecting Your Investments

    At Crain & Wooley, we understand the importance of protecting your investments. We offer a variety of services to help you plan for your future and ensure that your assets are transferred according to your wishes. Contact us today to learn more about our services.

    Please call or fill out our online form to schedule a consultation.