Some financial institutions call it TOD (transfer on death) and some call it POD (payable on death) but it's where you cause a particular account's assets to go directly to the person(s) of your choice and avoid probate with regard to those accounts.
Let's say you have three accounts, and to keep it simple, they are all worth the same amount and you want that same amount to go to three people.
You could set up each account to be divided into thirds, with one third each going to Persons A, B, and C. Each would have to prove you had died and get their third. Until all three show up to get their money, there's a balance left in accounts that needs to be completely disbursed.
Or, you could say Person A gets ALL of account A, Person B gets all of account B, and person C gets all of account C.
Are there any advantages or disadvantages to doing it one way over the other? The main advantage I see to the latter method is that each beneficiary only has to deal with getting funds from one account, and there's less work for the financial institution - just one transaction per account/person, three total and they're done.
The first way, there are 9 transactions total, three people x three accounts. More work, etc.
So I'm thinking the 2nd way is better unless there's a reason I haven't thought of to do it the other way. One concern is making sure all three people know that I've died and they need to go get their money. If person B needs to go get their share (100%) of account B and no one steps up to claim ANY of it, then it all sits there until such time it goes to the state if there's no alternate beneficiary to come forward. But using the 9 transaction method, if one person doesn't stay in touch and doesn't even know you died, at least two-thirds of the account gets dispersed to the other two persons, instead of an entire account going to waste.
I don't know that it matters. Is there something I haven't thought of? Which way would you do it? Is the apparently simpler way really the only sensible way to go?
Let's say you have three accounts, and to keep it simple, they are all worth the same amount and you want that same amount to go to three people.
You could set up each account to be divided into thirds, with one third each going to Persons A, B, and C. Each would have to prove you had died and get their third. Until all three show up to get their money, there's a balance left in accounts that needs to be completely disbursed.
Or, you could say Person A gets ALL of account A, Person B gets all of account B, and person C gets all of account C.
Are there any advantages or disadvantages to doing it one way over the other? The main advantage I see to the latter method is that each beneficiary only has to deal with getting funds from one account, and there's less work for the financial institution - just one transaction per account/person, three total and they're done.
The first way, there are 9 transactions total, three people x three accounts. More work, etc.
So I'm thinking the 2nd way is better unless there's a reason I haven't thought of to do it the other way. One concern is making sure all three people know that I've died and they need to go get their money. If person B needs to go get their share (100%) of account B and no one steps up to claim ANY of it, then it all sits there until such time it goes to the state if there's no alternate beneficiary to come forward. But using the 9 transaction method, if one person doesn't stay in touch and doesn't even know you died, at least two-thirds of the account gets dispersed to the other two persons, instead of an entire account going to waste.
I don't know that it matters. Is there something I haven't thought of? Which way would you do it? Is the apparently simpler way really the only sensible way to go?
