When someone passes away, their financial assets are going to be passed on to the next generation. This is sometimes done through a will. A parent who has $300,000 and three children may state that each person should get $100,000 from their estate.
These types of transfers can sometimes be challenged, however. Maybe another beneficiary thinks that undue influence was involved or that the estate plan is partially fraudulent. They could challenge the plan, making things more complicated. But there are some types of transfers that can’t be challenged, as they avoid probate.
Insurance policies
One example of this is a life insurance policy. The life insurance company doesn’t need to read the will or follow the instructions in the estate plan. All the company needs to do is pay the beneficiary who is listed on the policy. The life insurance payout is not connected to the estate plan. If the two are in conflict, the beneficiary designation takes precedence. This prevents other beneficiaries from challenging the payout.
POD accounts
Another example of this is a payable-on-death account. It works in a similar fashion, in that there is a beneficiary designation that the financial institution must adhere to. The difference is that this designation can be added to a bank account or another financial account. The beneficiary becomes the account holder, a transfer of funds that also cannot be challenged.
This helps to demonstrate some of the complexities of estate planning and the probate process. Those involved need to know about all their legal options, especially if there are serious financial questions or conflicts.