Beneficiary Designation: Small Steps that Can Save Your Estate Thousands

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One of the most common scenarios we see when a person passes away is that they never listed a beneficiary on their savings or checking account at their bank. When the bank is notified that the Decedent passed away, they normally “freeze” the account and will only act at the directions of the probate court if there is no listed beneficiary. When this happens, very few options are available to the next of kin for accessing the money apart from opening a probate estate.

Payable on Death (POD) Accounts in Alabama

Many bank accounts allow the account holder to designate one or more beneficiaries to assume control/ownership of the account when the account holder passes away. By doing this, there is no question as to who will receive title to the account This is one of the most overlooked, yet simple tools that should be incorporated into a person’s estate plan.

Retirement and 401(k) in Alabama

These types of accounts are similar to POD accounts in the way that they will also have a beneficiary designation. It is a good idea to double check that retirement accounts are titled correctly in the event that the account holder gets divorced, remarried, or the beneficiary predeceases the account holder.

What Happens if a Beneficiary is not Listed?

Because there is no mechanism directing an account transfer, it is likely that the bank will need an “order” from probate court to release the funds. This means that they can’t release any funds unless a probate estate is opened and a settlement order is issued by the Judge of Probate containing instructions for who gets what.

In What Way will Failing to Designate a Beneficiary cost me money?

Failing to designate a beneficiary often makes it impossible to receive the funds without hiring an attorney to go to probate court. Because the bank normally won’t release the funds without a settlement order from probate court, it is difficult to sidestep the need for retaining a probate attorney.

Bottom Line

Whether you’re dealing with a personal checking/savings account or a particular type of retirement account, make sure a beneficiary is listed. If not, the entire estate will likely have to be probated in order for the funds to be distributed to the heirs. Brennan R. Clifton, Attorney at Law, has handled numerous estates involving assets without beneficiary designations and knows how to navigate Probate court with thoroughness and efficiency.

If you’re left to deal with a loved one’s financial affairs, give our firm a call at 251-422-6417 and let us discuss a course of action for your unique situation.

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