Your estate plan is the roadmap that your loved ones will use to pass along your assets after your death. One of the first things that you have to do when you’re creating the plan is to list all your assets so you know that they all have a place.
What some people might not realize is that there are some assets that you don’t need to include in your estate plan. Some of these are ones that have a payable on death designation attached to them.
What’s a payable on death designation?
When you open a financial account, such as a checking or savings account, you may fill out a form that tells the institution who to give the money to when you pass away. That form is known as a payable on death designation. In some instances, it’s referred to as a Totten trust.
Because there are already legal instructions in place about the account’s disposition after your death, you don’t need to include it in your estate plan. In fact, your estate plans cannot override a payable on death designation on an account. For this reason, it’s wise to review your POD designations from time to time — just to make sure they still match your goals.
Creating a comprehensive estate plan is important so you know that you can care for your family after you pass away. It’s best to get this taken care of as soon as possible so that everything is in order when they need to use it. Just remember to review it periodically so you can ensure that it still reflects your current wishes.