Some people find it hard to believe, but it is possible for joint account holders to determine who should receive the assets in an account after the surviving account owner passes away. Accounts referred to as transfer on death accounts (which are also sometimes referred to as payable on death accounts or Totten trusts) allow joint account owners to determine how assets should be passed on after the death of both account holders. Because these types of accounts can play a particularly important role in estate planning, the following will take a brief examination of how these accounts operate.

Understanding How Transfer on Death Accounts Operate

A person who creates a transfer on death account is responsible for the results of asset transfers from the account. Many people who create transfer on death accounts decide to create the account with language stating that a person indemnifies a bank from any claims if the individual relocates, beneficiary plans go against estate plans, or any other complexity that can interrupt the transfer of assets. The recipient of assets that are placed in a transfer on death account can be a child, a relative other than a spouse, and even a friend. The spouse of a deceased individual, however, almost always has a claim to these assets, which can complicate matters. Since 2011 in Oklahoma, an individual who has been left assets through a transfer on death account is required to file an affidavit and a copy of the death certificate within a window of nine months following the account owner’s death.

Potential Obstacles in Transfer on Death Accounts

It is a wise idea for people who create transfer on death accounts to remain cautious because the beneficiary can end up facing a complex situation if assets are transferred to the wrong individual or a sufficient amount of taxes are not paid. In some situations, a custodian can even refuse to honor a proper beneficiary request. Another significant obstacle can arise if a person attempts to pass assets to more than one individual. In situations in which several beneficiaries are named, many transfer on death accounts allow an account owner to assign different amounts to each individual. When beneficiary dies before the account owner, the beneficiary’s interest is often split among the remaining beneficiaries.

Speak with an Experienced Estate Planning Lawyer

If you live in Oklahoma City or the surrounding area and are the owner of a transfer on death account, it is a wise idea to update your account beneficiaries. If you are debating creating a transfer on death account, it can help to speak with an experienced estate planning lawyer. Contact attorney Jim A Lyon today to schedule a free initial consultation. Over the years, attorney Lyon has helped numerous people create estate plans to protect their families and their legacies.