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SENIOR RESOURCES

BEnEFiCiarY dESiGnationS and

ProBatE aVoidanCE by Lee Franks

n my practice and personal contingent provisions to deal with unsuccessful.
experience, I frequently come predeceasing beneficiaries and other
Iacross the view that one should reasonably foreseeable circumstances, The point of this short comment is
avoid probate whenever possible however, beneficiary designations not that beneficiary designations or
since probate is seen as expensive and outside of a will or trust are often probate avoidance is good or bad,
burdensome. A more complete view more rigid and can lead to unintended but that effective estate planning
would consider what role the laws of a circumstances. should consider the advantages and
particular state might play in making shortcomings of both and that the
probate more painful and whether I often refer to an example where a time, effort, and expense of doing it
common alternatives are just as single person, Joe, has two children, right are worth it.
effective as probate. A full discussion Jack and Jill, and Joe intends to leave Now for the inevitable small print: The
of either question is far beyond the his estate equally to both children content of this article is meant to educate,
scope of this short article, but I do and their respective descendants. to inform, and sometimes to entertain, but
wish to make a short comment on Being prudent, Joe has executed a will not to advise any reader; the subject matter
one common alternative to probate— consistent with this plan. Jack and Jill is necessarily summarized and abbreviated
beneficiary designations. each have one child, Jack has Sally, or otherwise condensed, and so, not
and Jill has Sam. Joe has a $100,000
A beneficiary designation in its certificate of deposit at the local bank, actionable. I am happy to serve you if I am
simplest form is an agreement and being prudent, he has named Jack able, but I do not represent you unless you
wherein title to property, personal and Jill equally as his beneficiaries. and I have met and I have agreed to do so.
or real, passes to a designated party Unfortunately, Jill
upon some event, often the death of predeceases Joe, and
the property’s owner or the death before he can update
of someone enjoying the benefits of the beneficiaries
the property. The possibilities are on his certificate of
infinite, but common examples include deposit, Joe dies. In
beneficiary designations on life this example, a likely
insurance, transfer on death provisions outcome is that Jack
for investment accounts and real claims his $50,000,
property, payment on death provisions and the other $50,000
on financial accounts, and so on. returns to Joe’s estate
Basically, someone dies, someone gets and is distributed by
the property. However, problems can his will, resulting in
arise when the someone set to receive another $25,000 to
the property dies before the owner or Jack and $25,000 to
current beneficiary. Jill’s descendant, Sam.
This result is clearly
As a general matter, I consider wills not the plan that Joe
and trusts to be pretty flexible when it envisioned, and note
comes to transferring property upon as well that if the
someone’s death. An attorney may purpose was to avoid
craft all manner of conditional and probate, that too was

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