One effective way of avoiding probate is to make use of financial accounts that have a ‘pay-on-death’ feature. This feature, if used properly, allows you to avoid probate and distribute your assets directly to your heirs or loved ones as you designate. Upon your death, the beneficiary simply presents a death certificate to the financial institution and the assets can be paid directly to the beneficiary without having to incur the costs, or experience the delays, of probate administration. But when using these convenient devices, there is always one thing you must keep in mind:
Do you know who your beneficiaries are?
In one case, a son reviewed his late father’s affairs only to discover that his father had only one substantial asset: an IRA account. When reviewing the IRA account, the son discovered for the first time that he was not named as the beneficiary. Who had his father named as his beneficiary? The father’s ex-girlfriend. Worse yet, it was an ex-girlfriend the father had not seen, or had any contact with, for approximately 15 years. It was unlikely that his father wanted to leave this money to his ex-girlfriend and exclude his son but by failing to review his beneficiary designations, this is exactly what happened.