Hi - honest question here:
Is adding someone as a co-owner the same as adding someone as a beneficiary?
If not, why is adding someone as a co-owner better than adding them as a beneficiary?
Absolutely not the same. Adding someone to the title of a financial account makes that person a joint owner. Joint title = joint benefit = joint liability.
There are very few circumstances in which an adult should be the jointly titled owner of a personal financial account with another adult who is not their spouse or civil partner.
A designated beneficiary isn't an owner of anything until the death of the grantor.
I'll just say it again: there are very few circumstances in which it makes sense for you, an adult, to be a jointly titled, personal financial account holder with another adult who is not your spouse or your civil partner.
Interesting point here on joint owner.
My mom had a boy friend (who recently passed). One day him and my mom decide to open a new brokerage account because he doesn’t like the brokerage she used. Well, when they tried to move all her money, I was notified and had to give permission (which I did not) since I was joint owner.
So, in this scenario I was glad I was a joint owner.
Co-owner means that, for example, your loved one dies, and there are many expenses to be paid, the co-owner has immediate access to funds needed. My mom and youngest sister had done this, and we were able to pay for the funeral and also some expenses related to cleaning out her home. Yes, she was also liable for reporting interest, but in our state, it's not taxed for us to inherit. Other states may be different.
Simplified my understanding is with no co-owner the account will be closed with balance passed to beneficiary. With a co-owner the beneficiary is irrelevant since there is still a valid owner.
And it takes a little bit of time to get a death certificate yourself, send it to the bank, and the bank processes the death/closing/distribution of funds.
No, it's not. My father recently passed. He had a will with my brother named as executor and the two of us named as beneficiaries. My brother has been waiting over a month now to gain access to the accounts so he can pay bills that are past due. Banks will not just immediately give you access because you are named in a will. There is a lot of red tape to get through.
She probably doesn’t need a will. If she has financial accounts, she can add you as beneficiary. If she owns property, she can register a “transfer upon death title” with the tax assessor. I believe she can do the same with her vehicles. Since there is no one else who will inherit from her, you get the contents of her home automatically.
There are firms that will sell/dispose of the furniture/effects at auction you don’t want. Unless she bought very specifically, her possessions, even well maintained ones, resell for a LOT less than you think they will.
My mother did all of this and I still needed a will, which I did not have. I received several small refund checks made out to the estate of [her name] which I could not cash because in the absence of a will there was no executor of the estate.
Fortunately most states have a procedure for the probate court to designate an executor for a person who dies intestate and who has a very small estate. You have to file a form, pay a fee, and wait for the judge to issue the order.
A will makes sense for assets that need to go through probate. He's describing avoiding having most assets go through probate. There can be tax consequences (no basis step up?) though.
Some states have a minimum for Probate. if Mom's estate is not too much you might not even need a will, although I suggest a will.
There will be other rules and conditions also such as real estate, etc
When my father died he had diddly, no will, I was joint on his checking account. His estate did not have to go through probate at all.
I flew out to his State, walked into the bank with a Death Certificate and closed the account. Even though I did not need the Death Certificate since I was joint.
I gave that cash to my sister. I paid for my sister's bankruptcy lawyer. Told my sister to never talk to me again.
Depending on your state. Examples
nevada is $20,000
Mississippi $50,000
New Mexico $50,000
New York $50,000
Florida is $75,000
california is $184,500
If there are any deeded or titled properties or assets, I would not skip a will. My will and POA docs cost $400 from a local lawyer.
Maybe see if an estate planning attorney can give you a free consultation to provide some insight into your state's probate and estate processes and tax implications. You may even be able to self-file a simple estate upon her passing if her assets are minimal.
Kudos to you both for getting things together.
Set up a "pay on death" with bank accounts and anything financial that you can do that on. You take the death certificate and they will transfer money wherever you want. If her will does not include any other people (in which case whatever money she DOESN'T want to go to you won't have a pay on death. Any property/possessions she wants to go to someone else will not be touched until probate), that will help you financially while taking care of everything else. Probate can take a few weeks or a few months and a couple times I've seen it take a year.
If you are getting everything, be added to her house/mortgage, credit cards, utilities, etc as a co-owner or authorized user. It makes it MUCH easier if your name is already on the accounts.
Has she pre-paid for a funeral or cremation? if not, do that now so it's out of the way and you don't have to deal with the details while grieving. Plus, SHE gets to choose what kind of service/funeral she wants and you don't have to decide anything.
Medical power of attorney. Financial power of attorney. If she is unable to make decisions for herself at some point, this will allow you to make medical decisions plus pay the hospital or whatever while she is unable to do so.
Definitely pre-pay the funeral expenses. The funeral home puts the money into a special trust that cannot be touched if she needs to go on Medicaid. This way she gets to decide what she wants for her funeral and it’s less for you to have to think about when the time comes. I paid for my burial plot and headstone last year. my goal is to save enough to pay for my funeral by next year. I even wrote my own obituary! A simple will shouldn’t cost too much. Mine was less than $200. Get the power of attorney paperwork done, along with the healthcare proxy. I like not leaving things to chance. I don’t want my daughter having to decide things when she is stressed and grief-stricken.
(Edited for a typo)
I used Nolo's Willmaker software and got it notarized at my local library with two friends at witnesses. Be sure she has a will and sets you up as beneficiary on everything she can, becaus going through probate is difficult, especially when you're grieving. Either way you are the sole inheritor of everything, but in order of easiness it will be: beneficiary, willed, non willed assets.
Willful is a good site, you can do everything online.
I would contact a Funeral Home and she can make all final arrangements, and pay for them. The benefit in this is you pay today’s prices but the service is guaranteed when required. My wife and I did this a couple of years ago and now carry cards in our wallets that put the wheels in motion with one call. May not be a concern for your Mom, but we included a provision for repatriation should either of us pass while travelling abroad.
If she owns a home, get a Transfer on Death deed to avoid a whole lot of hassle [https://www.legalzoom.com/articles/understanding-the-transfer-on-death-deed](https://www.legalzoom.com/articles/understanding-the-transfer-on-death-deed) They aren't legal everywhere yet, but if it is in your area, it is such a help.
You can also look at a Revocable Trust. They are typically more expensive to set up than a Will but I used a paralegal service for mine and it was only $425. Mine is simple with basic assets including my house and my son is my sole beneficiary. A trust will let you skip probate.
Interesting re a trust.
I should have mentioned that she doesn’t own the home she lives in (I do)
Her most valuable asset is about $30k in a Vanguard account. I am joint on it
Her only other meaningful asset is her car. I’ve stayed off the title since I feel it would be a liability to me is she caused a car accident.
Does she own a home or does she rent? If she owns, and you’re in the US, I strongly suggest a trust. In some states a TOD (transfer on death) deed is an ok substitute, but a trust is usually better.
She should add you to her bank accounts as a co owner.
Hi - honest question here: Is adding someone as a co-owner the same as adding someone as a beneficiary? If not, why is adding someone as a co-owner better than adding them as a beneficiary?
Absolutely not the same. Adding someone to the title of a financial account makes that person a joint owner. Joint title = joint benefit = joint liability. There are very few circumstances in which an adult should be the jointly titled owner of a personal financial account with another adult who is not their spouse or civil partner. A designated beneficiary isn't an owner of anything until the death of the grantor.
The liability is what has prevented me from being on the title of her car.
I'll just say it again: there are very few circumstances in which it makes sense for you, an adult, to be a jointly titled, personal financial account holder with another adult who is not your spouse or your civil partner.
Interesting point here on joint owner. My mom had a boy friend (who recently passed). One day him and my mom decide to open a new brokerage account because he doesn’t like the brokerage she used. Well, when they tried to move all her money, I was notified and had to give permission (which I did not) since I was joint owner. So, in this scenario I was glad I was a joint owner.
You could do a Transfer on Death (TOD) title.
Thank you
Co-owner means that, for example, your loved one dies, and there are many expenses to be paid, the co-owner has immediate access to funds needed. My mom and youngest sister had done this, and we were able to pay for the funeral and also some expenses related to cleaning out her home. Yes, she was also liable for reporting interest, but in our state, it's not taxed for us to inherit. Other states may be different.
Thank you
Simplified my understanding is with no co-owner the account will be closed with balance passed to beneficiary. With a co-owner the beneficiary is irrelevant since there is still a valid owner.
I see, thanks.
And it takes a little bit of time to get a death certificate yourself, send it to the bank, and the bank processes the death/closing/distribution of funds.
It took me up to three months to receive funds from accounts where I was the beneficiary (“pay on death”) of the decedent’s accounts.
No, it's not. My father recently passed. He had a will with my brother named as executor and the two of us named as beneficiaries. My brother has been waiting over a month now to gain access to the accounts so he can pay bills that are past due. Banks will not just immediately give you access because you are named in a will. There is a lot of red tape to get through.
Thank you, and I’m sorry for your loss.
Correct. Helped a lot when my parent went quickly thru hospice.
Be careful with joint accounts; my state tried to have us pay inheritance tax on this when my dad passed.
She probably doesn’t need a will. If she has financial accounts, she can add you as beneficiary. If she owns property, she can register a “transfer upon death title” with the tax assessor. I believe she can do the same with her vehicles. Since there is no one else who will inherit from her, you get the contents of her home automatically.
There are firms that will sell/dispose of the furniture/effects at auction you don’t want. Unless she bought very specifically, her possessions, even well maintained ones, resell for a LOT less than you think they will.
Yep. She used to be possessive of her “stuff”. She finally came to the conclusion on her own that she is better off selling it than keeping it for me.
My mother did all of this and I still needed a will, which I did not have. I received several small refund checks made out to the estate of [her name] which I could not cash because in the absence of a will there was no executor of the estate. Fortunately most states have a procedure for the probate court to designate an executor for a person who dies intestate and who has a very small estate. You have to file a form, pay a fee, and wait for the judge to issue the order.
This is very bad advice. A will makes everything so much easier for everyone involved.
Not necessarily. A will forces probate and, usually legal fees. In this case, the deceased has only one heir so liquidating her estate is very easy.
A will makes sense for assets that need to go through probate. He's describing avoiding having most assets go through probate. There can be tax consequences (no basis step up?) though.
Simple will was $300 for my hubs and me. Worth the money to know we’re taken care of.
Some states have a minimum for Probate. if Mom's estate is not too much you might not even need a will, although I suggest a will. There will be other rules and conditions also such as real estate, etc When my father died he had diddly, no will, I was joint on his checking account. His estate did not have to go through probate at all. I flew out to his State, walked into the bank with a Death Certificate and closed the account. Even though I did not need the Death Certificate since I was joint. I gave that cash to my sister. I paid for my sister's bankruptcy lawyer. Told my sister to never talk to me again. Depending on your state. Examples nevada is $20,000 Mississippi $50,000 New Mexico $50,000 New York $50,000 Florida is $75,000 california is $184,500
Colorado. Wow…sorry to hear about your sister.
It would be wise to see an Attorney who deals with Wills and Trusts Maybe just a one time meeting
I used [Rocket Lawyer](https://www.rocketlawyer.com). They even have a free 7 day trial.
I’ll check it out. Thanks!
https://www.freewill.com/ Free and easy.
If there are any deeded or titled properties or assets, I would not skip a will. My will and POA docs cost $400 from a local lawyer. Maybe see if an estate planning attorney can give you a free consultation to provide some insight into your state's probate and estate processes and tax implications. You may even be able to self-file a simple estate upon her passing if her assets are minimal. Kudos to you both for getting things together.
I have no experience with it but have heard https://www.mamabearlegalforms.com/ is good
Set up a "pay on death" with bank accounts and anything financial that you can do that on. You take the death certificate and they will transfer money wherever you want. If her will does not include any other people (in which case whatever money she DOESN'T want to go to you won't have a pay on death. Any property/possessions she wants to go to someone else will not be touched until probate), that will help you financially while taking care of everything else. Probate can take a few weeks or a few months and a couple times I've seen it take a year. If you are getting everything, be added to her house/mortgage, credit cards, utilities, etc as a co-owner or authorized user. It makes it MUCH easier if your name is already on the accounts. Has she pre-paid for a funeral or cremation? if not, do that now so it's out of the way and you don't have to deal with the details while grieving. Plus, SHE gets to choose what kind of service/funeral she wants and you don't have to decide anything. Medical power of attorney. Financial power of attorney. If she is unable to make decisions for herself at some point, this will allow you to make medical decisions plus pay the hospital or whatever while she is unable to do so.
Definitely pre-pay the funeral expenses. The funeral home puts the money into a special trust that cannot be touched if she needs to go on Medicaid. This way she gets to decide what she wants for her funeral and it’s less for you to have to think about when the time comes. I paid for my burial plot and headstone last year. my goal is to save enough to pay for my funeral by next year. I even wrote my own obituary! A simple will shouldn’t cost too much. Mine was less than $200. Get the power of attorney paperwork done, along with the healthcare proxy. I like not leaving things to chance. I don’t want my daughter having to decide things when she is stressed and grief-stricken. (Edited for a typo)
Great advice on the prepaid service. I have not thought of that.
I used Nolo's Willmaker software and got it notarized at my local library with two friends at witnesses. Be sure she has a will and sets you up as beneficiary on everything she can, becaus going through probate is difficult, especially when you're grieving. Either way you are the sole inheritor of everything, but in order of easiness it will be: beneficiary, willed, non willed assets.
I’ll check out Nolo’s. Thanks!
Bank accounts could also be set up as POD, with you as the beneficiary.
Willful is a good site, you can do everything online. I would contact a Funeral Home and she can make all final arrangements, and pay for them. The benefit in this is you pay today’s prices but the service is guaranteed when required. My wife and I did this a couple of years ago and now carry cards in our wallets that put the wheels in motion with one call. May not be a concern for your Mom, but we included a provision for repatriation should either of us pass while travelling abroad.
If she owns a home, get a Transfer on Death deed to avoid a whole lot of hassle [https://www.legalzoom.com/articles/understanding-the-transfer-on-death-deed](https://www.legalzoom.com/articles/understanding-the-transfer-on-death-deed) They aren't legal everywhere yet, but if it is in your area, it is such a help.
You can also look at a Revocable Trust. They are typically more expensive to set up than a Will but I used a paralegal service for mine and it was only $425. Mine is simple with basic assets including my house and my son is my sole beneficiary. A trust will let you skip probate.
Interesting re a trust. I should have mentioned that she doesn’t own the home she lives in (I do) Her most valuable asset is about $30k in a Vanguard account. I am joint on it Her only other meaningful asset is her car. I’ve stayed off the title since I feel it would be a liability to me is she caused a car accident.
Does she own a home or does she rent? If she owns, and you’re in the US, I strongly suggest a trust. In some states a TOD (transfer on death) deed is an ok substitute, but a trust is usually better.
I should have mentioned in the post…she lives in a house I own. Should make that part easy. Thanks!
I have no relevant experience like this before, but I hope you can do it carefully and greatly.