Quite often people do not include financial assets such as bank accounts, certificates of deposit (CD) and/or Individual Retirement Accounts (IRAs) in their estate planning, i.e. making formal arrangements for distribution of their assets after death. Generally, if such financial assets, owned individually, do not contain provisions for a beneficiary, they will likely be subject to probate (testate if a Will or intestate without a Will), thereby leaving financial assets to be distributed pursuant to the California Probate Code.

Individual Bank Accounts

If the decedent owned a bank account (or CD) and did not name a beneficiary for the account (see Payable on Death Bank Accounts (POD)), depending on the amount in the account at death, the account will likely be subject to probate and be distributed pursuant to applicable provisions of the Will or intestate succession pursuant to the California Probate Code, a rigorous and time-consuming process whereby the court oversees the dissolution of an estate. To avoid this result please see Payable-on-Death Bank Accounts (POD), below.

Individual Retirement Accounts

Clients often assume that naming heirs in their will is sufficient and that there is no need to duplicate those beneficiaries in their IRAs. This is far from the truth. You must have an IRA beneficiary designation to avoid probate.

For more detailed information on IRA accounts please refer to my blog at: https://www.sweeneyprobatelaw.com/articles/no-living-beneficiary-on-an-individual-retirement-account-ira-what-now.

Jointly Owned Accounts

In general, if the co-owner of a jointly owned account passes away, the proceeds will automatically pass to the surviving owner and will not be subject to probate. A joint account is an account payable on request to one or more of two or more parties, whether or not mention is made of any right of survivorship. During the lifetime of the parties, joint accounts belong to the parties in proportion to their net contribution to the account absent any clear and convincing evidence of a contrary intent. Sums remaining on deposit in a joint account at the death of a party belong to the surviving party or parties and not to the estate unless there is clear and convincing evidence of a different intent.

Payable-on-Death Bank Accounts (POD)

Payable-on-death bank accounts offer an easy way to keep money—even large sums of it—out of probate. All you need to do is properly notify your bank of whom you want to inherit the money in the account or certificate of deposit. It's that simple. When the account owner dies, the POD funds will automatically pass to the named beneficiary(ies). Typically, a beneficiary can claim the proceeds from a POD account by going to the bank with a death certificate and proof of identification.

Transfer on Death Stocks, Bonds, or Brokerage Accounts (TOD)

A TOD account for stocks, bonds, or brokerage accounts disburses much like POD accounts. They do not need to be probated and, like a POD account, can be claimed by the beneficiary upon presentation of a death certificate and identification.

For more detailed information on POD and TOD accounts please refer to my blog at https://www.sweeneyprobatelaw.com/payable-on-death-and-transfer-on-death.

Bank Accounts Owned by a Trust

Any financial accounts titled and held in the name of a trust will not be subject to testate or intestate succession, i.e. probate. However, since trusts are established and conditioned by a benefactor, a trust-owned account must be operated in accordance with the terms of the trust. For example, a grantor might leave a certain sum of money for their grandchild, on the condition that the funds not be disbursed until the child turns 18.

Conclusion

If you are confronted with a financial account without a named beneficiary or a predeceased named beneficiary and the owner of the account has died please contact me for a free consultation. I am an experienced and well qualified California probate attorney and your one source solution for your California probate. Please feel free to look at other pages of my website including articles I have drafted to assist in the understanding of the complexities of California probate law.

I have assisted many families with their California probate legal rights and options. Because California probate law is complex, it is important that you retain a qualified California probate attorney and not try it alone. If you wish to gain more information on California probate or if you need the general assistance of a California probate lawyer, please contact me for a free consultation. I will spend time with you to answer your questions. You can reach me by phone at (760) 989-4820, by email at [email protected] or through my online contact form.

From my office in Southern California, I represent families in all California counties, including Southern California Counties such as Imperial County, Los Angeles County, Orange County, Riverside County, San Bernardino County, and San Diego County. I also represent parties residing outside of California, including foreign countries, that have probate matters affecting real and/or personal property in California.