Chayet & Danzo, LLC Chayet & Danzo, LLC www.Coloradoelderlaw.com
Call for a Free Initial Consultation
Direct 303-872-5980
Toll-Free 888-472-1088
Email Us
Compassion, talent and dedication: guiding colorado families and Their Trusted Advisors During Times of Need

Avoid 3 mistakes with Colorado pay-on-death (POD) accounts

Many accounts fall into the category of payable-on-death that generally transfer outside the probate process. POD options are common for checking and saving accounts and CDs. Transfer-on-death (TOD) provisions are common for 401(k)s, IRAs and other nonretirement brokerage accounts.

In Colorado, a 2013 law allowed account holders to specify proportionate distributions between two or more beneficiaries on POD accounts. The default, however, remains that without a written designation, each listed beneficiary receives an equal amount of the assets. As you can see, beneficiary designations can be powerful tools. But do not make the following mistakes.

Mistake No. 1: listing a beneficiary with credit issues

Loved ones often hide their money issues. It is not always possible to figure out or predict whether a potential beneficiary may have aggressive creditors or a soon-to-be ex-spouse ready to seize a bequest.

Because money or shares pass directly to a beneficiary, they are the same as any other asset and susceptible to a judgment or lawsuit. You can, however, take steps to protect a gift by structuring a transfer through a trust.

Mistake No. 2: failing to plan for incapacity

These types of accounts pass only upon death. And accounts owned by a couple with rights of survivorship pass only upon the death of the second spouse.

It is not necessarily only memory loss or very old age that affects capacity. An unexpected illness or serious car accident could leave a beneficiary on an account without access. A POD account designation does not function as a joint account while the account owner is alive. A conservatorship hearing might be required to gain access to needed funds to pay ongoing expenses, which can cause delays and add costs.

Mistake No. 3: forgetting to update beneficiary designations

Often, you complete beneficiary forms when you set up accounts, so it is easy to write in a name and forget about it. For this reason, when a parent dies or you start divorce proceedings, it is crucial to review and update all beneficiary designations.

If a listed beneficiary predeceases the account owner, the account will go through probate. A listed ex-spouse, rather than children or a current spouse, could inherit, defeating carefully drafted provisions in a will.

While these POD and TOD accounts can play a role in an estate plan, they are not a replacement for comprehensive planning. Mistakes can lead to conflict and ruined relationships. Seek professional legal advice to ensure that you have the tools in place to protect and provide for loved ones.

No Comments

Leave a comment
Comment Information

Watch Our Firm Video

We are the premier Elder Law firm in the Colorado region. We set ourselves apart from other law firms in the area with our talent, dedication, compassion and ability of our attorneys to handle any case in Elder Law. We serve Colorado families with experience and dignity in your time of need.

View More Videos

Denver Office
650 S.Cherry St., Suite 710
Denver, CO 80246

Toll Free: 1-888-472-1088
Phone: 303-872-5980
Fax: 303-355-8501
Denver Law Office Map

Edwards Office
105 Edwards Village Blvd.
#D-201
Edwards, CO 81632

Toll Free: 888-472-1088
Toll Free: 1-888-472-1088
Fax: 303-355-8501
Edwards Law Office Map

Aspen Office
600 East Hopkins Avenue
Suite 301
Aspen, CO 81611

Toll Free: 888-472-1088
Toll Free: 1-888-472-1088
Fax: 303-355-8501
Aspen Law Office Map

  • Rated by Super Lawyers Macro Chayet SuperLawyers.com
  • Rated by Super Lawyers Frank J. Danzo, III  SuperLawyers.com
  • Member National Academy of Elder Law Attorneys, Inc. TM
  • Avvo Rating 10.0 Superb Top Attorney Elder Law
  • 2015 Five Star Professional Wealth Manager Multi-Year Winner
  • Our new 2015 Medicaid Book: how to protect your Family's Assets from devastating nursing home costs
  • Proud Sponsor 2015-Denver Colorado Senior Law Day
  • Peer Review Rated For Ethical standards & Legal Ability TM Martindale Hubbell
  • Haystack