The Drawbacks Of Naming A Child As Beneficiary On Bank Accounts

Parents often plan for their estate to ensure that their children are cared for after they pass away. Planning for your estate is critical when providing for your loved ones and making sure your legacy is secured. Many parents choose to name their children as beneficiaries on their bank account, believing it is a simple and efficient way to leave the funds to their children. Unfortunately, this approach can have unintended consequences and possibly jeopardize the goals you have for estate planning. Below, our Daytona Beach estate planning lawyer explains further.

Lack of Control 

When you designate a child as a beneficiary on your bank account, you are essentially granting them immediate control and access over the funds. Although this seems convenient, it may also mean that your child could use the funds for their own benefit without taking into consideration the other beneficiaries or your wishes. In addition, joint ownership of a bank account will expose your property to your child’s legal liabilities, such as their creditors, and place your hard-earned savings at risk.

The Potential for Family Disputes 

Designating one child as a beneficiary of your bank account and excluding others may create conflict and tension among your children. If distributions are not equal, it can lead to disputes and resentment, ultimately deteriorating the relationships within the family. You can help eliminate the potential for family disputes by creating an estate plan that treats all of your children transparently and fairly. This can also help ensure that generations to come will enjoy a harmonious legacy.

Reduced Asset Protection 

Property held in joint ownership is exposed to the personal liabilities of all owners, including your children. If a child faces legal issues or financial difficulties, any property that is jointly-owned can be vulnerable to legal judgments or creditors’ claims. Likewise, designating a child as a payable-on-death (POD) beneficiary can lead to substantial risks and complications. Although it may seem like a straightforward method of transferring property upon your death, it can have unintended consequences. These include:

• POD designations can avoid the probate process, meaning the property is automatically distributed to the named beneficiary. This can lead to distributions that are not equal and do not coordinate with your overall estate plan, resulting in disputes among family members.
• If one of your children passes away before you, the designation may be out of date and result in additional complications when trying to settle the estate.
• When a child is listed as a POD beneficiary, it opens the funds up to their creditors and other legal liabilities.

Our Estate Planning Lawyer in Daytona Beach Can Handle Your Case 

At Bundza & Rodriguez, our Daytona Beach estate planning lawyer understands the importance of protecting the future of your loved ones and securing your legacy. We are committed to providing tailored solutions and personalized guidance to meet your unique goals and needs. Call us now at 386-252-5170 or contact us online to schedule a consultation and to learn more about how we can help.

Source:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0736/0736.html