How to Avoid Probate on Financial Accounts and Protect Your Assets

To keep your bank accounts and ordinary (non-IRA) investment accounts out of probate, simply designate beneficiaries using special account types.  You should make them:
✅ POD (Payable on Death)
✅ TOD (Transfer on Death)
✅ ITF (In Trust For)

These designations allow your money to go directly to your named beneficiary upon your death—bypassing probate entirely.

How to Set Up a POD or TOD Account

This is not something you do in a will or with a lawyer. Instead, you simply fill out a form at your bank, credit union, or investment firm. Once completed, your beneficiary will only need to provide a death certificate to claim the account—no probate needed!

Why You Should NOT Add Your Children to Your Bank Accounts

Many parents think they can avoid probate by adding their children’s names to their bank accounts, but this can backfire badly:

🚨 Risk of Lawsuits and Divorce: If your child gets sued or divorced, their creditors or ex-spouse could claim your money, since their name is legally on the account.
🚨 Loss of Control: If your child’s name is on your account, they could legally withdraw your money at any time.
🚨 Potential Tax Issues: Adding a child’s name may be considered a gift for tax purposes, leading to unexpected tax consequences.

The Right Way: Use a Durable Power of Attorney

If you want your child to help manage your finances while you’re alive—such as paying bills or handling banking in case of illness—use a Durable Power of Attorney for Financial Affairs instead. This allows them to act on your behalf without making them a co-owner of your money.

By taking these simple steps, you can protect your assets and ensure a smooth transfer of wealth to your loved ones—without probate headaches.