CEA Beneficiary Designations & Account Titling Flashcards

Which type of account titling allows property to pass directly to a surviving co-owner without going through probate?

Answer: Joint tenancy with right of survivorship

Joint tenancy with right of survivorship transfers the deceased owner's share directly to the surviving joint tenant, bypassing the probate process.

A beneficiary designation on a life insurance policy generally supersedes which document?

Answer: The insured's will

Beneficiary designations on life insurance policies are contractual and override instructions in the policyholder's will.

What is a 'per stirpes' beneficiary designation?

Answer: A deceased beneficiary's share passes to their descendants

Per stirpes means a deceased beneficiary's share is inherited by their lineal descendants rather than being redistributed among surviving named beneficiaries.

Which account titling method is only available to legally married couples in community property states?

Answer: Tenancy by the entirety

Tenancy by the entirety is a form of ownership reserved exclusively for legally married couples and provides survivorship rights plus creditor protection.

A POD (Payable on Death) designation on a bank account allows the account to:

Answer: Transfer automatically to the named beneficiary upon the owner's death

A POD designation directs the bank to pay the account balance directly to the named beneficiary upon the account owner's death, bypassing probate.

Failing to update beneficiary designations after a divorce can result in:

Answer: The former spouse receiving assets contrary to the account owner's current wishes

While some states revoke beneficiary designations on divorce, federal law (ERISA) governs most retirement accounts and may still honor the former spouse's designation.