Many Arizonans share accounts with a spouse or other loved one. While these accounts can become subject to legal proceedings like divorce, they can also play a pivotal role in estate planning. Generally speaking, a jointly-held account will transfer to the other owner upon one owner’s death. But what happens when that second owner passes away? Without an estate planning document to dictate that, the assets in that account may be subjected to the probate process. This can be costly, time-consuming, and leave assets vulnerable to claim by those who the deceased may not have wanted to be involved.
This is where transfer on death provisions can prove beneficial. These accounts can transfer assets to a named beneficiary upon an individual’s death, thereby bypassing the probate process. While these transfer on death accounts, also known as totten trusts, are often utilized when all parties to a jointly held account pass away, they can also be used to transfer portions of an account upon the death of just one of the account holders. However, a spouse is still entitled to a fair share of those assets.
Transfer on death provisions don’t just apply to bank accounts, either. A motor vehicle, house, and other items can be subjected to transfer on death provisions. There are some assets, though, such as many retirement accounts, which are subjected to federal law and therefore unavailable to be transferred through a totten trust.
There are many complexities that can arise throughout the estate planning process, and there are many options to consider. Transfer on death accounts are still susceptible to creditor claims, which may not make them as desirable as some estate planning options. However, by discussing these matters with a qualified legal professional, Arizonans can devise a plan that fits their needs.