A Kentucky man died without a will and left $2.3M in accounts to his kids. An appeals court says his widow gets half

Most of Perrine’s assets were tied up in his IRA account and an investment account, both managed by Schwab. Instead of writing a will, he instead opted to use transfer-on-death (TOD) accounts. The two accounts held a combined total of more than $2.3 million.

His mistake — and the one his surviving family has spent years trying to untangle — was assuming that Kentucky would honor the arrangement he had made.

Why transfer-on-death accounts weren’t enough

Transfer-on-death (TOD) accounts offer some benefits that make them worth considering if you have a substantial amount of money in an investment account.

They work similarly to a life insurance policy: You decide how you want the money to be left to your surviving family members, and once you die, the money goes to the beneficiaries immediately.

That’s nice if you want to ensure that your family doesn’t have to deal with the probate process.

Unlike most life insurance policies, you’re free to spend the money in your account however you’d like while you’re alive, knowing that once you die, it will be distributed according to your wishes.

For some people, this option could be a win-win. You don’t have to worry as much about how you spend your money now or how your family will receive it when you die.

The complication that Perrine’s family ran into stemmed from how Kentucky handles the distribution of an estate when someone dies.

Kentucky law says that when a person dies intestate (without a will), their surviving spouse gets half of their personalty (property they owned other than real estate). That includes funds in a TOD account.

Perrine first met his second wife, Nancy, in 1952. But he ended up marrying someone else, had four kids, and then got a divorce. In 2015, he married his old flame, Nancy.

Days before his death, one of his kids, who had power of attorney over his accounts, transferred $18,000 each to his kids and grandkids.

After his death, his kids argued that the money in his accounts — which named only them as beneficiaries — shouldn’t have been included when deciding how much his wife was entitled to receive.

TODs let you spend your money now

The state ruled that money should go to his wife instead, largely because of the flexibility that TOD accounts offer.

Perrine also had two life insurance policies, and there were no questions about who should receive those proceeds: his kids, who were named as beneficiaries.