When most people think about beneficiaries, they immediately think about insurance policies and perhaps retirement accounts. Few people, unfortunately, think about their bank accounts or savings accounts. These are the two types of accounts that often do not have beneficiaries listed on them. If you are married, that’s not typically a concern—your spouse will inherit these accounts. If you’re not married, though, and do not have beneficiaries on these accounts, it can lead to a number of issues that your heirs have to deal with.
Probate Will Be More Difficult without Beneficiaries
Without a listed beneficiary, the accounts will have to go through probate. If you have a will, that will make the process easier, but it can still be several months or longer before your heirs have full access to the accounts. Without a will, it can be a year or more as the court will need to determine your heirs and who should legally be entitled to a split of your estate.
The Accounts Will Be Used to Pay Creditors if They Go to Probate
If you die owing money to creditors, including credit card companies, mortgage companies, and other lenders, your estate has to pay off those creditors before your heirs receive any money or property. If you have named beneficiaries on your bank and savings accounts, those accounts skip probate and go straight to those named individuals. Creditors cannot claim any of the assets in those accounts.
Beneficiaries Gain Access to the Accounts More Quickly
If you don’t have life insurance and are planning for your heirs to use the money in your bank or savings accounts to pay for your funeral and other costs, it’s important to understand that they will not have access to these funds right away. In fact, they will need to have your death certificate before they can access the accounts even if they are named as a beneficiary. However, even with that delay, they will still have access to these funds much more quickly than they would if the accounts have to go to probate. Funeral homes and other services may be willing to delay payments until you have access to these accounts, but they will likely not be willing to wait until probate is over.
Need help making certain all of your assets are protected from creditors and are given to the right heirs? Contact Michael F. Kanzer & Associates today to request a free estate planning consultation.