DO THEY AVOID PROBATE AND TESTAMENTARY INTENT?
In many banks and financial institutions, much is made of avoiding probate (i.e., the process by which a Will is proven in Court to be valid). Avoiding probate will allow an individual’s assets to pass to his or her intended beneficiaries without Court involvement. In order to facilitate the passing of property outside probate, many states recognize what are known as “Testamentary Substitutes.” In New York, these testamentary substitutes are codified under the Estates Powers and Trust Law. “Payable on Death” and “Transfer on Death” accounts are a common form of testamentary substitute. While the use of these types of accounts may be beneficial in certain circumstances, these accounts can also have devastating consequences with respect to an individual’s overall estate plan. For this reason, payable on death accounts must be coordinated with an individual’s Will and estate planning goals. What is a Payable/Transfer on Death Account? A Payable on Death (POD) account (also known as a “Tot