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Seamless Wealth Transfer

NYCDoug
  |     |   334 posts since 2011

Some good news, for a change . . .

If you find yourself in the fortunate/unfortunate position as sole beneficiary of a significant inheritance, I'll spare you my trial & error blind alleys, roadblocks, and misfires, and instead share with you what I've found to have worked well, thus far:

1) Set up as many of your accounts as possible to be "joint tenancy" accounts. I did this in only two instances, but it made life very easy. In hindsight, I wish I had made all the accounts "joint" . . .

2) Second easiest is to establish your own account at the same institution as your relative -- be it bank, credit union, or brokerage. When a POD (for banks) or TOD (for brokerages) situation comes through, you can simply accompany the death certificate (a copy often suffices, sometimes by email) with a letter of instruction advising your FI to transfer funds/holdings from the deceased's account to yours.

3) Current interest rates may not be to your liking at existing accounts. So when you want to move your inherited funds around it is important to find a combination of institutions to work with that have the least friction with each other. My holy trinity is: any Shared Branch (for credit unions); Chase Bank (for overnight processing of certified "bank" checks); and online United Bank (Connecticut) for same day transfers to their high interest bearing Money Market account (mine currently at 2.5%). All these institutions have seemingly unlimited capacity for dealing with large sums of money, without any picayune caps.

And though ACH withdrawals from United are limited to six per month (per Regulation D) you can write as many checks as you want, for as much as you want, without concern for Regulation D.

As an example, I went to my local credit union yesterday, pulled available balances from two Shared Branch credit unions, deposited a portion of the total into a third credit union, and left with two checks. I deposited these checks into Chase, which instantly credited me with $200, putting the rest on hold, But the very next day the entire deposited amount became available. And so from United Bank's website I scheduled a pull today, which has already posted there (and is presumably earning interest). Not bad -- considering these were all six-figure transactions.

Again, I'm sparing you the horror tales of what did not work: mostly banks -- both online and brick & mortar -- with annoying caps that make it difficult for you to take care of business, interfering with the smooth completion of intended transactions (closing accounts; opening others) either through delays, or limitations on daily/monthly transfers.

I'm happily sharing what I've found to be most beneficial for beneficiaries. And I'm also curious to hear from others what kind of "hub" accounts have worked best for them. These days I'm on the lookout for places to safely and easily stash cash, staying under the FDICs $250k insured amount. So bring 'em on -- the more, the merrier!

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anonymouse
  |     |   1 posts since 2019
This is very helpful. A couple of caveats/questions might be mentioned.
1. Joint Tenancy accounts mean that the joint tenant can withdraw all funds without any notice. So you have to have someone you trust.
2. I am not sure I understand what item 2 is suggesting. Can you please clarify. Is this for only certain circumstances or at a specific stage in the process?
3. If the person (who is expected to pass first) is on medicaid - it is my understanding that the government will go usually back a certain number of years to review accounts and attempt to recoup expenses from said person's estate. So if you transfer all the funding to your account - they could go after you. (Note: I have no experience with this one and maybe it is not common.)
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NYCDoug
  |     |   334 posts since 2011
Regarding point #2 . . . instead of Joint accounts, set up two independent accounts at every bank / brokerage / credit union with which you do business. Each account should list the other person as beneficiary. [Brokerages call these accounts POD = Payable on Death] [Banks / Credit Unions call these accounts TOD = Transfer on Death].

In most cases the survivor need only present the death certificate of the deceased, which initiates the transfer process. In some cases (brick & mortar banks) the transfer can be same day / instantaneous. This is facilitated by already having an existing count at the branch.

In my experience, brokerages (I dealt with three of them) have a longer procedure, which involves some back office "inheritance" department. But, again, if the survivor already has a preexisting account it's somewhat on the order of a pitcher throwing a ball into the catcher's mitt; in slow motion, but everything is already in place (the "sender" and the "receiver").

Trickier to deal with are online banks and (online) credit unions. My smoothest experience involved emailing a copy of the death certificate. Another wanted a signed / mailed letter of instruction accompanied by an original death certificate, which they subsequently returned. (And which I facilitated by supplying them with an SASE -- Self-Addressed Stamped Envelope.)

My worst case -- which I will publicly call out for bad behavior -- was with Popular Direct, who initially misdirected me, and then played all sorts of delay games, ignoring my mailed letter of instruction, and finally, a month later, sending me three checks (for three CD accounts) on two different days, saving the largest check for the second day. Popular was obviously holding on to the money (and not paying interest) for as long as they could -- despite the fact that I had my own account with them, and the funds could simply have been transferred overnight into my account, as done by other online institutions.

I filed a complaint about Popular Direct to the OCC, which, it turns out, does not oversee them. (They make up their own banking rules in bankrupt Puerto Rico). But Popular Direct ultimately got the message, through another governmental agency. (Little good that it did me, since, by that time, a month later, I had finally been paid.)

So the takeaways are: (1) if not setting up joint accounts, then have each person set up their own account at the same institution, naming the other as beneficiary. (2) Avoid doing business with Popular Direct; they treat customers like patsies.
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111
  |     |   672 posts since 2019
NYCDoug - Good advice. Based upon my experience I'd like to "drill down" on your first 2 points.

A person inheriting these days (which as NYCDoug said, is very often a "fortunate/unfortunate" scenario), may find themselves the beneficiary of a "living trust". Many of these may have been set up in the late 1990's or early 2000's when the IRS had a much smaller "estate tax exemption amount". (Currently that is $11.4 million/person, but back when many of these trusts were created it was much smaller - so, fairly often a living trust was established to preserve as much capital as possible.) Also, some trusts were set up to additionally deal with state estate or inheritance taxes, or with "special needs" beneficiaries.

As the main caretaker and the sole legal beneficiary, before the decedent's death, even as his POA and with his express written permission, I found it nearly impossible to get a financial institution where an account had been established with his living trust as the owner, to modify that account into a "joint tenancy" account which included me as "joint" with the trust. They claimed that doing so might disable the trust from being either a single OR a joint owner. (Much of trust and estate law is state-by-state, so this may be different where you live.)

For a number of reasons I decided not to press this issue with these financial institutions. But, I DID (as NYCDoug suggests in his point no. 2) establish my own account with two of them. That did help save several steps later, and make things simpler after the decedent had passed away.
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