BOZEMAN — When organizing an estate prior to death, several tools are available to allow individuals to have their financial assets pass to the people they choose instead of the state, according to a Montana State University Extension specialist.

Marsha Goetting, MSU Extension family economics specialist (MSU Photo)

Marsha Goetting, MSU Extension family economics specialist, said many financial assets can be protected through contractual arrangement. By designating beneficiaries for checking and savings accounts, stocks, bonds and mutual funds, individuals can pass more onto their heirs.

One option to consider is a payable-on-death designation, or POD, whereby an individual can name whomever they want as a beneficiary of their checking or savings accounts, certificates of deposit and U.S. savings bonds. A POD allows a person to keep control of their money in accounts during their lifetime. The beneficiary has no ownership rights in the accounts, and after death the balance is passed to them. There is no probate required for financial accounts passing directly to beneficiaries.

Goetting said POD beneficiaries can be changed by filling out a form with the financial institution.

“Consider naming a secondary beneficiary should your primary one die with you or before you,” she added. “Be sure to review the beneficiaries on your accounts and update when circumstances change such as births, deaths and marriages.”

Another option is a transfer-on-death registration, or TOD. The Montana Uniform Transfers on Death Security Registration Act allows an owner of securities to register a beneficiary to receive the title after death. A TOD is like a POD, but is used to designate a beneficiary for stocks, bonds and mutual funds and is kept with an issuer, transfer agent or broker.

A TOD beneficiary has no ownership rights in a person’s securities while they are alive and upon death, the securities are transferred directly to them. The beneficiaries who inherit stocks, bonds or mutual funds can then decide whether to keep the investments or sell them. Downloadable TOD forms can be found on websites of companies where accounts are held. Like a POD, TOD beneficiaries can be changed by filling out a new form.

Montana law allows for naming family, friends, community foundations or other charitable organizations as beneficiaries on other financial accounts, such as life insurance and annuity policies; 401(k), 403(b) and 457 accounts; individual retirement accounts – Roth and traditional; and employee benefit plans like SEPs, SIMPLEs; and Keogh retirement accounts. Downloadable beneficiary designation forms can often be found on the website of the company where the account is held or through a company representative.

“Consider beforehand whom you want to receive your assets at death and then complete the appropriate legal documents to make sure your wishes are carried out,” Goetting said. “Make a list of assets on which you wish to place a POD, TOD or beneficiary designation.” Goetting added that individuals should either visit their financial institutions and designate beneficiaries or have the institution mail the forms to avoid probate fees upon death.

More information about beneficiary designations is available in MSU Extension MontGuides and online at http://www.montana.edu/estateplanning/eppublications.html. For those who do not have computer access, copies of "Non-Probate Transfers” and “Designating Beneficiaries through Contractual Arrangements” are available from county Extension or reservation offices.

-by MSU News Service -