Probate provides a legal process for beneficiaries to receive assets owed to them per the stipulations in a will. Those composing a will might want to make things as easy as possible for surviving relatives, and time spent going through probate could create complications. Designating beneficiaries on transfer on death (TOD) accounts may save the recipients time and money that otherwise would be spent in a North Dakota probate court.
The transfer on death option
When someone dies and their assets lack a beneficiary or a co-owner, a probate court determines who receives them. A last will and testament presents a way for someone to choose who or what receives their assets, be they relatives or a charitable organization. Without a will, the assets fall under North Dakota’s intestate laws. Exceptions exist, such as assets that change ownership based on transfer on death designation.
Transfer on death designations typically applies to bank accounts, brokerage accounts, and other financial assets. Essentially, the account holder assigns someone as a beneficiary. When the account holder passes away, the account’s ownership transfers to the beneficiary or beneficiaries listed. Such transfers occur outside of probate and may require little more than a death certificate to process.
Concerns over transfer on death accounts
Estate administration and probate come with concerns, as does the testator’s transfer on death accounts. For one, if the account is jointly owned, the beneficiary would not receive anything if one owner passes away. The other owner becomes the sole owner and can now change the beneficiaries.
Anyone taking part in estate planning may wish to carefully weigh options to designate an asset transfer in a will or make a TOD designation. The process may not be finished even after listing someone as a TOD beneficiary. Revisiting the accounts and keeping or changing the beneficiary designations might be necessary.