While having a Will is essential to making sure your intentions are known and carried out after your death, merely having a Will does not avoid what is known as Probate. In California if your estate is worth more than $184,500 the Probate court process is required.
And why is Probate to be avoided? It is because it is a time-consuming, expensive process involving the court system. But there is a much simpler, faster, and cost-free way to avoid Probate and transfer your financial assets to your family, friends, and the causes you support. And what is that?
Three letters state it clearly: P.O.D. (Payable on Death)
Avoid Probate by Making Financial Accounts "Payable on Death"
Bank accounts, Investment accounts, Annuity accounts, Life Insurance, and Retirement accounts can each designate who will inherit the money in the account after the death of the original owner. This is done by filing a POD, or Payable on Death form (also known as “Beneficiary Designation” forms”) with your Bank, Investment, Annuity, or Retirement company and naming one or more Beneficiaries on each account. A financial account with a named Beneficiary is then known as a “payable on death” (POD) account. These accounts bypass the Probate process when the original owner passes away.
It is an easy, “cost-free service” to convert an account to a POD account by filling out the proper forms at your bank, credit union or investment or retirement company, and designating one or more beneficiaries on each form. This allows for the transfer of these accounts to the named beneficiaries. The completed form gives the bank or company the authorization to convert the account to a POD. Your accounts will operate just as they did before you designated a beneficiary. A beneficiary has no rights to your account until after you die and is only entitled to receive whatever is remaining in the account after all account owners have died. After your death, the beneficiary you named has the right to collect the money remaining in your account. They would present the bank or company with proper identification and a certified copy of the original account holder’s death certificate. They will provide the new account owner with a few more forms to fill out, and then the money gets transferred to the beneficiary. In most cases, it should be fast and easy, and no waiting for Probate!
Yes! You Can Name a Charity to Be the Beneficiary of Your POD Accounts!
A key benefit of naming a charity, such as The Janaka Foundation, as a beneficiary of your accounts is that 100% of the funds will be distributed to the charity tax-free. For people who have both income-producing and non-income-producing assets and who wish to leave a portion of their assets to charity and a portion to individuals, it is often most advantageous to leave income-producing accounts (such as investment accounts and IRAs/401ks) to charity and the non-income-producing assets (such as life insurance) to individuals. Unlike the individual who would be subject to tax liabilities on an income-producing asset, the charity will receive the assets without having to pay taxes.
I Have Named Beneficiaries on My Accounts, Is There Anything Left for Me to Do?
YES! Please periodically check with your financial institutions to make sure that the beneficiary designations have been made in their system and that all the information is correct. Ensuring that you have the correct names and other identifying information is vitally important and should not be overlooked.
Then provide the beneficiaries with the name and location of the financial institution, and with a copy of the beneficiary designation form. If you have a financial advisor, you may want to provide his/her contact information to your beneficiaries as well.
Notification to Beneficiaries?
It’s important to know: Financial Institutions (Banks, Investment and IRA companies) do not usually notify a Beneficiary after the original owner has died. It will be the beneficiary’s job to notify the financial institution of the death of that owner and to make a claim for the funds in the account. The clearer everyone is, the better the process will be.
Pod Accounts and the Need to Pay Debt
Key Takeaways
- Payable on death (POD)/Beneficiary Designations are an arrangement that an individual makes with financial institutions to designate beneficiaries to their bank accounts, investment and annuity accounts, and retirement and Life Insurance accounts. PODs are free and simple to create.
- So long as the beneficiary designation form was properly filled out and filed with the bank or financial institution, your beneficiary should quickly have access to any remaining money in the account by presenting a death certificate for the original owner, along with their own proof of identification.
- Generally, a POD account can have more than one beneficiary, with each receiving a percentage of the account. Check with your bank about how you can name more than one beneficiary.
- To name the Janaka Foundation as a POD beneficiary of any of your financial accounts, please have the following information ready:
Name of beneficiary: The Janaka Foundation
EIN: 94-3400189Address: 14618 Tyler Foote Rd, Nevada City, CA 95959
Please Contact Us for more information about how to make a planned gift to the Ananda Janaka Foundation.
We are always happy to hear from you.
In Divine Friendship,
The information provided in this newsletter is intended to be helpful for a general audience. It does not, and is not intended to, constitute legal advice, nor is it a substitute for the services of a licensed, estate-planning attorney. Readers should contact their attorney to obtain advice with respect to any particular legal matter.
Simple Steps in Estate Planning
- Make a Will
- And include a Living Trust as needed to avoid probate
- Name Beneficiaries on your IRA, Life Insurance policy, Bank accounts, investment accounts etc.
- Notify Ananda Janaka Foundation
Other ways to give:
- Donor Advised Funds
- Qualified Charitable Distribution from an IRA or other retirement accounts
- Digital Currencies
Build the Ananda Endowment Fund
All year end gifts go towards building the endowment fund.
