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How Does POD Bank Account Work in Community Property State Like Wisconsin? - YouTube
Channel: Burton Law LLC
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Hello!
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I'm Attorney Thomas Burton, I'm an estate聽
planning and asset protection attorney聽聽
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here in Wisconsin and today, we return to聽
our popular question and answer series.
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Today's question comes from Racine,聽
Wisconsin and the writer asks the following -
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"How does a payable on death bank account work聽
in a community property state such as Wisconsin?聽聽
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My husband and I are running into confusion when聽
naming beneficiaries on our payable on death bank聽聽
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accounts in Wisconsin. Since it is a community聽
property state would we need to name one of us,聽聽
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the spouse, on a joint bank聽
account as a primary beneficiary?聽聽
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Ideally, we'd like to name our two daughters to聽
have the proceeds split equally in order to avoid聽聽
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probate. If one of us were to pass away before the聽
other, would half of the bank accounts contents聽聽
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automatically go to the spouse regardless of聽
named beneficiaries? Thank you for your time."
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Thank you for your question,聽
this is an excellent question聽聽
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and you're on the right track here with the聽
payable on death bank accounts, if you want to聽聽
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use them as a probate avoidance device but it's聽
important to understand exactly how they work.
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So you're right that Wisconsin聽
is a community property state聽聽
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like several other states such as California.聽
In Wisconsin, we call it marital property. If聽聽
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both your names are listed on the account as聽
co-owners, joint owners, then if one dies,聽聽
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the remaining owner owns the entire account,聽
okay? So the beneficiary, the payable on聽聽
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death beneficiary, only would kick in upon the聽
second spouse's death, if you're joint owners聽聽
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on the account. So you could name both children聽
as beneficiaries on the account with a 50-50聽聽
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distribution and that would split聽
the account equally between them.
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However this will not work for any real estate you聽
own in Wisconsin and other assets, it only works聽聽
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for the assets in that bank account and the limit聽
on probate in Wisconsin, the amount of assets that聽聽
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trigger probate is $50,000 or more. So if you have聽
any real estate over that limit, you're going to聽聽
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want to look at other probate avoidance techniques聽
to completely avoid probate on your entire estate.聽聽
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This is why I often recommend a revocable living聽
trust as a complete plan to avoid probate for all聽聽
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of people's assets including tangible personal聽
property, real estate bankers accounts etc.
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Now, so what you're contemplating聽
will work, the payable on death,聽聽
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to the daughters but just be aware, it only聽
kicks in upon the second spouse's death. The聽聽
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money will then pass by the contract between you聽
and the bank to the payable on death beneficiary.聽聽
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So I would sit down in your situation, work聽
with a qualified estate planning attorney.聽聽
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They could help you design a聽
holistic plan to avoid probate聽聽
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on all of your accounts including real estate聽
financial assets and personal property.
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The one thing I see that people run聽
into trouble with these payable on bank,聽聽
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on death bank accounts is sometimes they put the聽
payable on debt beneficiary on there and then聽聽
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they never look at it again and they may change聽
banks or move money around and if it says here I聽聽
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think you say you have two daughters, so that's聽
helpful, there's just two, if you name them 50%聽聽
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on every account, that can help avoid running into聽
problems but sometimes people will name one person聽聽
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on one account and one person is payable on death聽
on another and then for instance, they move funds聽聽
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around between the account and it doesn't end up聽
being an equal distribution but when they set up聽聽
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the payable on death, it was going to be roughly聽
equal distribution but you have to really watch聽聽
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these account balances and think about where聽
you're keeping the money which can be a lot聽聽
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of maintenance to do, on an ongoing basis. That's聽
why I often prefer trust planning where the trust聽聽
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says, split everything 50-50 between my daughters聽
and then we can name the trust as the payable on聽聽
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death beneficiary of all the financial accounts or聽
better yet, re-title the accounts into the trust.聽聽
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Then you have incapacity protection if something聽
happens to you or your husband where you're聽聽
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unable to manage the assets. The successor聽
trustee can immediately step into your shoes,聽聽
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take over managing the assets until you regain聽
capacity and ultimately, you know that in your聽聽
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trust document, you've laid out, you want 50-50聽
split of everything between your two daughters聽聽
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and finally, when everything's properly titled聽
in the trust, you can avoid probate completely聽聽
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meaning no need to open a probate for聽
real estate or other assets you may own.
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So this is an excellent question. I want聽
to thank you for asking it because it's聽聽
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illustrative for other people watching,聽
thinking about these payable on death聽聽
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accounts. If this has been helpful to聽
you, please consider giving it a like,聽聽
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so that more people can see and聽
benefit from this information as well.
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Thanks for watching and we'll see you next time.
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