Right of Survivorship Accounts & Beneficiary Designation Forms may inadvertently bypass your estate plan

As a Houston Probate lawyer who handles estate litigation matters, I often find myself in the position of trying to clean up estate planning mistakes. One of the mistakes that I see time and again involves the use of joint tenant with right of survivorship or payable on death provisions for financial accounts.

In the typical scenario, mom is widowed with three adult children. Two of the three children have moved away to other cities or have jobs that do not allow them to see mom on a regular basis. However, the third child (I will call her “in-town daughter”) is a stay at home mother who lives in close proximity to mom.

As mom gets older, she finds that she needs more and more assistance with everyday tasks including paying the bills. Naturally mom turns to in-town daughter for assistance. To facilitate paying the bills, mom makes in-town daughter an authorized signer on her bank accounts.

When mom passes, she has two main assets, her house and her checking and savings accounts. Mom’s will states that her assets are to be equally divided between her three children and designates in-town daughter as executor of her estate.

In-town daughter probates mom’s will; however, when it comes time to file the inventory of the estate, the only asset listed is the house. It is generally at this point that the out-of-town children seek out a Houston probate lawyer like me to advise them of their rights.

Invariably I find that the reason in-town daughter did not list the financial accounts on the inventory is because the accounts have passed to in-town daughter through a joint tenant right of survivorship (JTROS) or payable on death (POD) provision. When a financial account is set up as JTROS or POD it does not pass according to the will, but rather passes at death to the other person named on the account. By designating the account as JTROS or POD, mom effectively bypassed the provisions of her will.

Unfortunately multiple party bank accounts are often set up JTROS or POD by default without anyone at the bank explaining the implications of these provisions. There is a running joke in the Houston probate lawyer community that more estate planning is done by low level bank account managers than by attorneys.

If you find yourself in this situation please contact a Houston probate lawyer like myself for advice. If you fill out a contact form and mention that you read this blog article, I will give you a free consultation to discuss your options.

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    Romano & Sumner, PLLC

    Romano & Sumner, PLLC