Estate Planning Tip: Taxable on Death Accounts

Taxable on death accounts have become a popular estate planning technique in recent years. The account automatically passes to designated beneficiaries upon the death of the primary owner. These type of accounts pass to beneficiaries outside of the probate process.

A person’s Last Will & Testament does not govern the disposition of these type of accounts. These accounts would not be available to the estate to pay creditors and administration expenses. It is important that a person periodically examine his or her estate plan to make sure that these accounts are consistent with her overall planning goals. Proper reviews may avoid unintended consequences relating to estate liquidity and to arguments between family members pertaining to wealth distributions.