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If you fail to designate a beneficiary or if the beneficiary that you assigned passes away before you, then your heirs will need to go to probate court in order to claim the remaining funds in the bank account.
You will be surprised how many people fail to update or even check the beneficiaries under their accounts. Most of the time you may or may not review you beneficiaries designation after opening your account.
The reason why it its so important for you to select the beneficiaries under your accounts is that if you fail to select a beneficiary or update your beneficiaries, and your beneficiary passed away before you, your heirs will have to pay a Florida probate attorney to collect those funds by opening a Florida probate administration.
A Florida probate attorney will charge a reasonable fee that may be up to 3% of the value of the funds or an hourly fee for their services. These means that if you fail to select the beneficiary under your accounts or keep them updated, then you will cost your heirs and your estate potentially thousands of dollars. All because you did not do a simple think like selecting or updating your beneficiary designation.
Another misconception that I see all the time is that you create a Florida last will and testament an do not change or update your beneficiary designation. In Florida a last will and testament only disposes of assets that go through probate court.
If your account has a beneficiary and that beneficiary is different that your beneficiary in your last will and testament, the beneficiary in your last will and testament will not inherit anything in that account.
This is because as I previously explained, your relationship between you and your bank or financial institution is a contractual relationship. The financial institution is legally obligated by contract to pay the beneficiary that you select under the your beneficiary designation form and not your last will and testament.
Another problem that I typically see is that you may designate all of your children as beneficiaries under your Florida last will and testament equally. However, you forget to update your beneficiary designation form and you left all of your funds under your bank account to only one child who helped you open the bank account.
In the previous example, the bank account might be the only asset which you may own. In addition, the result is contrary to your testamentary intent.
In this case, the beneficiary child would have no obligation to provide any of the funds in the bank account to your other surviving children. In Florida, children have no legal right to inherit from your assets. This can create conflict between the children and even expensive court litigation.
Making sure to complete a beneficiary designation form is one of the simplest ways to avoid Florida probate court. I will advise you review your bank accounts and other financial institutions to make sure you have a beneficiary in the event of your passing or to make sure that the beneficiary designation is updated.
Failing to do this simple task can cost a lot of time, money and stress for your beneficiaries. Nowadays, most institutions will allow you to review your beneficiary designation online and even update it in some cases.
If you have any questions or concerns about this topic do not hesitate to contact me. With proper planning Florida probate court can be avoided completely.
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