Pay On Death/Transfer On Death/Joint Ownership Pitfall
Dangers of using POD/TOD beneficiaries and joint ownership to avoid probate – you leave nothing in the estate or trust for the Personal Representative/Trustee to pay funeral expenses and other expenses of administration. A recent estate came in with this problem. If the PR/Trustee was the person receiving the POD assets, it would have been manageable, but that is not the case. The funds are going to a relative and the friend is having to pay out of pocket for burial expenses and expenses of administration. Moreover, POD/TOD and jointly owned assets also bypass the Will/Trust which could inadvertently disinherit the people named in the documents. Please do not use POD/TOD beneficiary designations or joint account ownership without fully understanding the ramifications of that. Always discuss this with a qualified estate planning attorney before using these probate avoidance techniques because it may have disastrous and unintended consequences.