The Importance of Beneficiary Designations

The Facts: My brother Joe was dying from cancer and wanted to be sure that all of his assets passed to his wife, Mary, upon his death without the need for court intervention. He mentioned this a number of times so I assumed he had taken the necessary steps to insure that his wishes were honored.

The car Joe drove was in Mary’s name and the house in which he lived was jointly owned with Mary. However, Joe had substantial assets in separate bank and brokerage accounts. After Joe died, Mary was told by the bank and brokerage company that Joe never signed any documents indicating that he wanted his accounts to pass to Mary automatically upon his death.

The Question: Is there any way Mary can get access to the funds in Joe’s accounts without getting authority to do so from the Surrogate’s court?

The Answer: Unfortunately for Mary, she will have to petition the Surrogate’s court for authority to access Joe’s accounts. If Joe died with a Will and the Will names Mary as executrix, Mary will need to file a petition seeking letters testamentary. The petition, an original death certificate and a fee based upon the value of the accounts must be filed with the Surrogate’s court in the county where Joe lived at the time of his death. Once letters testamentary are issued to Mary, she will be able to access the funds and, assuming she is the only beneficiary under the Will, do whatever she deems appropriate with the funds.

If Joe died without a Will, Mary will have to petition the court seeking letters of administration. The process and the fees for the administration proceeding are similar to those associated with a probate proceeding. Again, once letters are issued to Mary, she will have the authority to access the funds in the account. Mary will be required to distribute the funds in accordance with NYS intestacy statute that governs the distribution of estates of people who die without a Will. If Joe had children, they will be entitled to a share of the money in the accounts to the extent it exceeds $50,000.

Based on your description of the assets in the separate accounts as “substantial” I am assuming there is more than $30,000 at issue. If that is not the case, Mary can file with the Surrogate’s court an affidavit in relation to a small estate to get authority to access the funds in the accounts. The account numbers and the balance in each account must be provided in the affidavit. Mary will be issued a certificate for each account giving her authority to access the account.

It is unfortunate that Mary will have to seek court intervention in order to access Joe’s accounts but, she should take some comfort in the fact that the probate/administration proceedings are not burdensome and that her situation is not unusual. Clients frequently find that the steps taken by a decedent were not sufficient to insure that their estates pass as the decedent wished. To avoid this situation, I encourage my clients to periodically review all beneficiary designation and transfer on death forms that have been filed and to review how jointly held property is titled. These steps are critical to insuring that the client’s estate plan truly reflects the client’s wishes.

This article first appeared the Times Beacon Newspapers in December, 2018.

Linda M. Toga, Esq. provides legal services in the areas of estate planning and administration, wills and trusts, guardianship real estate, small business services and litigation from her East Setauket office.

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