If you want to take care of estate planning in Illinois, you have many ways to accomplish this task. Understandably, most people want to complete the estate planning process quickly. That’s why some people choose to distribute their assets through a taxable-on-death account. However, there’s another way to take care of estate planning that you’ll want to know more about.
What is a taxable on death (TOD) account?
A taxable on death account is a way to take care of estate planning. With this type of account, the owner chooses either a beneficiary or a certain type of financial account to receive assets. When the account owner dies, their chosen assets go to either the account or a beneficiary. A TOD account also helps ensure that no beneficiaries go through the time-consuming probate process.
What makes a revocable trust such a good idea?
At first, opening up a taxable-on-death account sounds like an easy way to complete the estate planning process. One drawback of TOD accounts is that they’re somewhat limiting. That’s why some people ditch their TOD accounts in favor of revocable trusts.
Revocable trusts stop your assets from going through probate court. Also, unlike TOD accounts, revocable trusts let the owner name a co-trustee or successor to step in if they become incapacitated. Another benefit of revocable trusts is allowing their owners to manage assets for their respective beneficiaries. Having a trust manage asset distribution is great for younger beneficiaries or those who can’t manage their own money.
In closing, TOD accounts can help someone distribute their assets. But there are other estate planning options worth looking into. That’s why it’s a must to closely research all of your options before jumping headfirst into a TOD account.