Uncovering what your relative left, and to whom

When a loved one dies, what can you conclude from their bank or financial account statements? Not much.

With increasing frequency, people are setting up bank accounts and investment accounts with a “designation of beneficiary” to transfer on death (TOD). Those stocks or funds do not go through probate. So if the next-of-kin or designated personal representative finds a recent bank statement or investment statement with substantial funds, that is no guarantee that those funds will be going through the court probate process. That money may be paid directly to a beneficiary, who may or may not a beneficiary under the Will or an heir under the law.

The frustrating part of TOD accounts is that often the family members themselves do not know it was set up that way. Unless the name of the account actually includes a “TOD” reference, the bank is not going to disclose information to anyone except the owner (now dead) or the beneficiary who presents a death certificate. So if a grieving wife arranges for the funeral, sincerely believing that her husband’s investment account is coming to her by probate or otherwise, she may learn too late that it was set up to pay on death to her husband’s grown son or, even worse, to the husband’s ex-wife because the husband forgot to change the designation of beneficiary when he divorced.

Conclusion: don’t make any assumptions based on financial statements found after a loved one dies. It may take a while to find out who has inherited any specific account.