Understanding Beneficiary Designations for Estate Planning in Ohio

Introduction: The Role of Beneficiary Designations in Ohio's Estate Planning

In the state of Ohio, you do not need a beneficiary designation. However, a beneficiary designated on an account allows your asset(s) to transfer immediately and outside of probate. This designation is called a “transfer on death” or “payable on death” designation. Anytime you start a new life insurance, or brokerage account, the provider will ask you to name a beneficiary. It is less common, though still a viable option, for checking accounts, savings accounts, motor vehicle titles, and real estate. Anytime a provider asks you to name a beneficiary, they are helping you (and your beneficiary) with estate planning!

Why Naming a Beneficiary is Crucial for Asset Transfer and Avoiding Probate

When you name a beneficiary, you are making a legal record to transfer that asset to the person listed as the beneficiary. This allows the asset to transfer immediately upon your death and outside of probate. A beneficiary does not have any interest in the asset while you are alive; their ownership interest only becomes effective upon your death. The benefit to having a beneficiary: (a) beneficiary has almost immediate access to the asset, (b) the transfer is not public record, and (c) the estate avoids the expense and delay of probate.

Diverse Assets Eligible for Transfer/Payable on Death Designations

A number of assets can transfer with a simple transfer/payable on death designation. Bank accounts, retirement plans, safety deposit boxes, investment accounts, automobile titles, and real estate can all transfer outside of probate using a transfer/payable on death nomination. All financial institutions and even the BMV have internal forms for their customers to utilize to make such a designation. This is a free/low cost and easy way to have assets transfer outside of probate! For real estate to transfer through a beneficiary designation, a transfer on death affidavit has to be filed with the County Recorder’s office in the county where the property is located. The key to each of these designations is they have to be filed while you are alive and of sound mind. All the designations can change during your lifetime by going to the Financial Institution, BMV, or County Recorder and filling out the appropriate paperwork.

Regular Review of Beneficiary Designations: A Must in Estate Planning

Some folks think estate planning is “set it and forget it.” That is simply not true–anytime you have an addition or subtraction to your family or add assets, it is important to review your estate plan and your designations. In Ohio, if you set up all of your designations while you are single, your spouse may have to go through probate just to get the funds in your checking account! The key life events that should trigger a review of your estate plan are marriage, divorce, death in the family, birth in the family, adoption, acquisition of real estate, and significant increase in net worth.

Navigating Unassigned Assets: Probate and Estate Distribution in Ohio

If you have an asset that does not have a beneficiary on file, the asset will pass according to your will (if you have one) or under Ohio’s descent and distribution statute (if you don’t have one). Probate Courts have an expedite process if the value of the asset is minimal ($35,000 for an individual or $100,000 for a couple), otherwise it will have to go through a full blow probate process which takes months and can cost hundreds or thousands of dollars to complete.

Finding Expert Estate Planning Support in Ohio

At ALH Law group we understand how difficult estate planning can be. Our team has a wealth of knowledge in estate planning from advising clients as well as our own personal experience. Estate planning is essential to help your loved ones handle your passing with as little stress as possible. Book a call with us to start your planning today!