Many people mistakenly believe that a simple Will is all the estate planning they need. However, it is very likely you may need more than a Will to cover your all assets. A Will does not cover all types of property. This is a list of five items your will cannot cover or address.
- Survivorship property: If you own property in joint tenancy with a right of survivorship with a co-tenant, your Will does not determine ownership and succession rights. Instead, the surviving joint tenant automatically has right of ownership upon your death.
- Retirement benefits: Retirement benefits, IRAs, 401(k) plans and other pension plans pass to your designated beneficiary listed on forms on file with the company which manages the asset. As such, you cannot change the designated owner by will. Instead, you will have to change beneficiaries using specific forms provided by your plan manager or administrator.
- Payable on Death (POD) Accounts: These accounts require you to designate beneficiaries by using specific forms, and to change beneficiaries, you must change your designations using those forms. Typically, your will cannot designate different beneficiaries.
- Life insurance proceeds: Similar to POD accounts and pension plans, you’ll need to go through your insurance carrier to change beneficiary designations.
- Stocks and investment accounts: Stocks and other investment accounts are transferable on death. To change beneficiary designations, you will have to change your TOD designation.
Even when a Will does cover an asset, such as real estate and bank accounts that are in your name alone, in many cases, a Will is not the best vehicle in which to transfer these assets. This is because, with the exception of modest estates, a Will will have to be probated. Probate is the protracted and expensive court procedure whereby a judge supervises the administration of a Will following the death of the Will maker. For many folks, a well constructed estate plan based upon a revocable living trust is a better way to proceed. With proper planning, each of the foregoing types of assets can be properly coordinated with your estate plan so that they can be administered during your lifetime and transferred on your death in an expeditious and economical manner.
To learn more, consult with an experienced and qualified estate planning attorney.
- Living Trusts and Incapacity Planning - March 31, 2020
- Estate Planning and Charitable Giving — Key Points - March 29, 2020
- Over-Funding Your Retirement Plan: A Potential Estate Planning Problem - March 27, 2020