My mother passed away last year and left a payable on death account to my sister who is also the executor of her will. The Will states that all assets should be split evenly among the children. Doesn’t the money in a payable on death account legally have to be split with the beneficiaries as outlined in the will? My sister has decided that the payable on death account my mother left to her is not part of the estate and that she has every right to keep that money out of probate and for herself. Do I have a legal right to sue the executor for my portion of that money? Leslie G., Curry
Leslie, the “Payable on Death” account belongs to the named beneficiary on the payable on death account. In this case, that is your sister. A Payable On Death bank account is a regular bank account that names a specific person as the beneficiary of all funds once the bank account holder dies. All someone does to set up a Payable On Death bank account is notify the bank in writing of the legal name of the person to inherit the account. Filling out a specific form your bank provides usually accomplishes this.
In just one easy step, a person can avoid probate court. In fact, the whole point of a payable on death account is to avoid probate administration of the asset. Leaving money for loved ones once we have passed on can be a difficult task, especially since many estates end up in probate court. One of the easiest and safest ways to bypass the confusion and headache is to create a "Payable On Death" bank account.
With a Payable On Death bank account, the beneficiary has no rights to the funds until your death. Until that time, you are free to use the money kept in the bank account, to change the beneficiary, or to close the account. The only real drawback to a Payable On Death bank account is that you cannot name alternate beneficiaries on one account. This can easily be overcome by setting up multiple Payable On Death bank accounts for different loved ones, such as three or four children.
You also do not have to worry about problems once the beneficiary tries to claim the funds on the Payable On Death bank account. As long as the beneficiary can prove that you have passed on, the money stored in the bank account will be given to that person or transferred to his or her bank account.
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