Source: http://blog.hillsbank.com/account-titling-4-of-4/
Timestamp: 2018-03-17 18:24:37
Document Index: 415326170

Matched Legal Cases: ['art 4', 'art 4', 'art 1', 'art 2', 'art 3', 'art 4']

Account Titling – The Good, The Bad, and The Misunderstood (Part 4 of 4) | Hills Helps
Account Titling – The Good, The Bad, and The Misunderstood (Part 4 of 4)
By: Erin Grabe
This is the final in a 4-part series on Estate Planning.
An often overlooked (but extremely critical) aspect of Estate planning include account titling and beneficiary designations. These control who receives the account, regardless of what the Will or Trust states!
Joint tenancy accounts with rights of survivorship and Payable on Death (POD) or Transferrable on Death (TOD) accounts are popular. These forms of ownership can be used with a variety of assets, including brokerage, checking, savings, and time deposit accounts. However, there can be some misunderstanding as to what happens to joint tenancy and POD/TOD accounts after an owner’s death. Joint and POD/TOD accounts can lead to the distribution of assets to your heirs in an unintended manner.
The public’s perception is that these types of accounts “avoid probate” at the owner’s death. Unfortunately, the true meaning of the term “avoid probate” can be the source of some confusion. It is true that joint tenancy and POD/TOD accounts do not get paid to your Estate at death, and therefore are not disposed of according to the terms of your Will. Instead, the account goes directly to the surviving joint owner, or in the case of a POD/TOD account, the named beneficiary or beneficiaries.
However, joint tenancy and POD/TOD accounts are not entirely excluded from your gross taxable Estate at death. Also, if formal probate occurs, joint and POD accounts are listed on your probate inventory and some or all of the value of such accounts may be included when calculating Attorney fees or Executor fees. POD/TOD accounts are also subject to Iowa Inheritance Tax and/or Federal Estate Tax depending upon who receives the asset and the size of your gross Estate.
Joint accounts are generally most appropriate for married couples. For a husband and wife, probate may not be required at the first spouse’s death if all assets are held in joint tenancy. Joint accounts can serve as a “safety net” immediately available to the surviving spouse; where money will be needed to pay funeral expenses or ongoing living expenses of the surviving spouse until life insurance proceeds are received or retirement accounts transferred.
Creating a joint account with someone other than a spouse should be done with caution. The assets of a joint account can be withdrawn at any time by any of the joint tenants regardless of who contributed the money. In addition, all of the funds held in a joint account may be subject to the claims of creditors of any of the joint tenants. Finally, joint accounts with someone other than your spouse can potentially create Federal Gift Tax liabilities. An alternative to a joint account is adding a signer to the account. This person may access the account but all assets are considered the primary account holder’s only.
There are potential pitfalls with POD/TOD accounts as well. Holding all of your financial assets in POD/TOD form can leave your Estate with a cash shortage. At death, your personal representative will need money to pay final debts, taxes and the ongoing expenses to maintain Estate property during administration (e.g. property taxes, utilities, and insurance). Care must be taken to ensure you leave your Estate with sufficient cash to pay final debts and administration expenses.
The Hills Bank Trust and Wealth Management Group has Officers in both Johnson and Linn Counties. We invite you to schedule a meeting with one of our experienced Trust and Wealth Management Officers by calling 1-800-899-8858 or visitng us online at HillsBankWealthManagement.com. We look forward to serving you as your trusted advisor.
Consult with your Estate Planning Attorney before converting existing assets to joint tenancy or adding a POD/TOD to an account. Failure to do so may affect your intended Estate Plan.
This post is for information purposes only and should not be interpreted as providing legal advice. You should consult an Estate Planning Attorney before executing any legal documents. Investment products are not a deposit, not FDIC insured, not insured by any government agency, carry no bank guarantee, and may go down in value.
View the complete 4-Part Estate Planning Series:
Part 1 – Getting Started with Estate Planning
Part 2 – Understanding Trusts
Part 3 – The Three Taxes
Part 4 – Account Titling – The Good, The Bad, and The Misunderstood
About Erin Grabe
Erin Grabe is a Trust Officer at Hills Bank’s North Liberty Location on Forevergreen Road. She serves customers in the areas of estate planning, estate administration, and personal trust administration. Erin earned her undergraduate degree at the University of Kansas and is a graduate of the University of Iowa College of Law. Erin can be reached at erin_grabe@hillsbank.com.
This entry was posted in Estate Planning and tagged Money Management, Money Saving, Trust and Wealth Management. Bookmark the permalink.
Wealth Management Spotlight: 5 Ways Assets Can Be Titled
Browse By Date Select Month March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014
Select Author... Aaron Schaefer Adam Determann Adam Magee Allison Bates Andy Brandt Angela Hagedorn Angie Greiner Bethany Welsh Bob Lamkins Brad Joens Brad Langguth Brad Zuber Brenda Langenberg Bryan Overy Byson Croy Chris Lewis Chuck Hippee Dale Farland Danielle Cahill Dave Haman Dave Kriz Dawn Lyons Deb Guinn Deb Schaffer Donna Hallett Dwight Seegmiller Erin Grabe Hannah Geyer Jack O'Rourke Janelle Johnson Jay Allpress Jeff Ritchie Jennifer Eden Jennifer Lough Jordan Olson Josh Holst Joy Newhouse Karin Bauer Karissa Wikert Katie Miller Keith Jones Ken Hinrichs Laura Hill Mark Ahlers Mark Koch Matt Olson Molly Brown Molly Dietz Nicole Slaubaugh Shaun Barry Sherry Mitchell Stephanie Schumacher Susan Moore Tim Smith Todd Joslin Todd Shaull Vincent Gaffney