03 Nov What’s the best plan to make cash accessible after my death?
Q. Where is the best place to have emergency funds that provide quick access for beneficiaries in case of death?
— Planning ahead
A. We’re glad you’re planning ahead.
There are several strategies you can use for this purpose.
You can have cash in a joint account with rights of survivorship with a single beneficiary, said Marc Alan Lescarret, a certified financial planner with Marc Alan Wealth Management in Rockaway.
But this could be problematic, depending on the beneficiary, he said.
“If the beneficiary removes funds beforehand, it is considered a gift, but if you die or become incapacitated, it is assessable,” he said. “For this strategy, you need to trust the beneficiary since they could remove all the cash in your joint account against your wishes while you are still alive.”
To remove that risk and potential mistakes, Lescarret said he prefers to see people gift assets to beneficiaries during their lifetimes, he said. As part of this, you can teach responsibility, such as having an emergency fund.
If you go the gift route, you should consult with a professional to determine the best and most appropriate gifting strategies for you, Lescarret said.
To access other kinds of funds, such as a life insurance policy, a bank account with a Transfer on Death (TOD) designation and retirement accounts with a listed beneficiary, will require a death certificate, perhaps an attorney and some legal documentation to receive payments from them, he said.
Assets that go to probate will take the longest and could be up to a year or more if there are legal challenges, he said.
“If beneficiaries have an emergency fund that lasts at least a few months, they can collect more funds from life insurance, investment and bank accounts that directly list them as the beneficiary,” he said. “Those funds can help them wait for the remaining funds from probate to arrive.”
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This story was originally published on Nov. 3, 2022.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.