Heather R. Chubb, Attorney at Law
The Chubb Law Firm
Gold River, CA 95670
Member of the national ElderCare Matters Alliance, California chapter
Answer: If you have an account that is set up with a beneficiary, that is payable on death to a particular person, it is not necessary for this account to be included in your revocable living trust. The premise behind the payable on death account is that when the account holder dies the account will legally belong to the beneficiary. This is one way to avoid the probate process for an individually owned account. Presumably, one of the reasons you would create a trust is also to avoid probate of your assets upon your death.
If the account is owned by your revocable living trust, because the trust does not “die,” the pay on death feature will never be triggered. In any event, I’m not certain that bank would allow an account owned by a trust to also carry a payable on death designation.
Although not absolutely necessary, including this account in your trust is a good idea and will help centralize the management of all your assets in the event of your incapacity or death and make life easier for your family. If the account is in your trust you can use your trust distribution instructions to indicate that this account go to a specific person. This is called a specific distribution.
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