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Published: Saturday, 8/18/2007

Having estate plan can ease hassles, expenses for heirs

Dear Dale: My banker had me list my two children as the beneficiaries on payable-on-death provisions on all my CDs, bank accounts, and IRAs. He said that was a way for my estate to avoid having to go through probate court when I pass away. I have done the same thing for my home and automobile, which pretty much covers all my assets. I was told that the items inside the house do not have to go through probate court and my children can dispose of them any way they want. I want to know if this is an accurate statement because I would hope they would not have to go through probate court when I pass away. My banker also said my children would be able to retrieve any of my accounts with their bank by just producing a death certificate.

ANSWER: Many people try to plan in advance so they can avoid having their estate tied up in probate court. Though going through probate isn't the painful experience it's often portrayed as, avoiding needless hassle and expense makes sense if it's possible.

Setting up bank accounts and titling property in a certain way as your banker suggested is one possible way to avoid probate. It's an easy process to fill out the paperwork with a bank to designate someone as the owner of the account after you die.

As far as retrieving the money, it's not always as simple as the designee showing a death certificate, but it's not that hard, either. In addition to a death certificate, one also is supposed to get written consent from the state tax commissioner for accounts in excess of $25,000. The tax commissioner, though, has the authority to waive that requirement. A surviving spouse does not need to apply for a consent to transfer.

For most people, these simple measures make a lot of sense for their estate plans. Using trusts to avoid probate is another common planning tool, but they're probably pitched to a lot of people who don't really need them. The benefit of a trust is that a court doesn't need to approve how the decedent's property is dispersed. It can be a relatively fast process to close the estate. Trusts also offer tax benefits for those with sizeable estates, but most people don't fall into that category.

So, whether it makes sense for you to follow your banker's advice depends on the amount of your assets. If you have a lot of money in your various bank accounts, you should consult an attorney to see if a trust is a better option for you. If you're like most people, though, using the payable-on-death designation is sufficient.

That said, I'd still advise consulting an attorney who does estate planning. An attorney who does this kind of work would be able to structure an estate to minimize tax consequences and would be able to tell you whether you should establish a trust. Yes, working with an attorney will cost you some money, but most people want to prevent their loved ones from having to unravel a legal mess after they pass away. It could be money well spent.

Dale Emch practices law at the Charles E. Boyk Law Offices, LLC, in Toledo. In his column, he will discuss general legal principles and answer readers' questions. Neither Mr. Emch nor The Blade present or intend his column to be taken as legal advice. Readers seeking legal advice should consult with an attorney. Readers should send their questions to Mr. Emch at demch@charlesboyk-law.com or Dale Emch, 520 Madison Ave., Suite 655, Toledo, OH 43604.

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