Living trusts are generally seen as one of (if not the) best ways to help your heirs avoid having to go through the probate process. However, the trusts do have a few requirements that can make managing them an ongoing process. While these aren't difficult requirements, sometimes they aren't ones you want to deal with at a particular point for whatever reason — maybe you started a new bank account and don't want to have to fill out the paperwork to add that account to your trust, for example. In that case, what you can do is create a payable-on-death account, which saves the account from the clutches of probate.
Set It and Forget It
When you open a payable-on-death, or POD, account, you request that particular type at your bank (you can't just open a regular account), give the bank the names of your heirs, and leave it at that. When you die, your heirs will be able to go to the bank and have your account paid out. There's nothing you have to do in between those times unless your heirs change, in which case you have to give the bank the new name.
Compare this to adding the new account to the trust, in which case you have to rename the account so that it reflects its place in the trust and modify the trust paperwork so that the new account is included, something which often requires extra legal assistance. Your beneficiaries have to bring proof that they are the successor trustees.
They Just Need the Death Certificate and ID
With a POD account, your heirs need your death certificate and their ID. It does help, if the heirs on the account are not the ones handling the trust, if they can get the successor trustee to go with them as sometimes banks want that extra verification. However, if the successor trustee can't go with them, the bank should have a procedure to verify the person presenting the death certificate. That's one of the whole points of a POD account — the payout is supposed to be automatic once your death has been proved, no court paperwork or other hoops necessary.
Still, some accounts may be better off as trust accounts, such as those where you want extra restrictions on the payout (such as ensuring two heirs each get half, rather than relying on the heirs to divide it up that way themselves — something that's not as easy as it sounds if the heirs are at odds). It's best to talk to a trust lawyer or estate planner to figure out which accounts would be better off in the trust.
For more information, contact a professional in your area or visit a website like http://wrightlawidaho.com/.
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