Two-thirds of U.S. adults have no will. That means many Americans do not handle their affairs post-death. It is a topic people prefer to refrain from discussing or dealing with. Unfortunately, they leave their dying intestate for grieving family members and other potential heirs to settle the descendant’s affairs. Considering this, people without a will should add a pay on death or transfer on death to their assets. Doing this will not address everything but handle a person’s assets.
What is a pay-on-death clause?
An owner designates a beneficiary directly for an asset. The assets remain in the owner’s name, and the asset does not transfer to the named beneficiaries until the owner’s death. Named beneficiaries have no access or control over a person’s assets while the owner is alive.
What is the difference between pay on death versus transfer on death?
You cannot list an alternative beneficiary to the account. This is a drawback if the beneficiary dies before the owner since the assets will automatically transfer to the estate or will. However, you can help reduce this by listing multiple beneficiaries.
If an owner has multiple beneficiaries, the process could become complicated. Plus, divvying up the assets may require negotiations and compromises among beneficiaries.
Assets are subject to applicable estate taxes, capital gains taxes, and inheritance taxes
Assets are still considered to be a part of the decedent’s estate. That means creditors can request debt repayment before beneficiaries can access the decedant’s assets.
Beneficiaries can receive benefits after providing a death certificate and providing any necessary documents and completed forms. Keep in mind, that each bank, credit union and brokerage account will have their own forms and requirements.
STAGES is here to be a resource for you and your loved one.