Are Your Assets Titled Properly?
When it comes to estate planning, the way you title your accounts can have a significant impact on the transfer of your assets upon your passing. It directly influences whether your estate will go through the complex and costly process of probate. Probate involves authenticating your Last Will and Testament, settling outstanding debts and taxes, and distributing the remaining estate to your chosen beneficiaries.
Account titling provides a significant benefit, enabling you to transfer assets directly to your heirs without relying on your Will. The way an account is titled takes precedence over the instructions in your Will and beneficiary designations on retirement accounts and life insurance policies circumvent the Will entirely. Changing title without speaking with your attorney or financial advisor may cause unintended consequences.
Let's explore some common methods of account titling:
Individual Accounts: These are accounts owned solely by a single person or entity. Assets held in individually titled accounts pass according to the instructions outlined in your Will and are subject to probate.
Transfer on Death/Payable on Death (TOD/POD): Adding this designation to individually titled accounts allows you to specify a beneficiary who will automatically receive the assets upon your passing. This method bypasses probate and ensures a smoother transfer.
Joint Tenants with Right of Survivorship (JTWROS): This method is commonly used by married individuals to transfer assets to their spouses. In JTWROS accounts, when one account holder passes away, the account is automatically transferred to the surviving account holder without going through probate.
Revocable Trust: If you have a revocable trust established by your estate attorney, you can transfer assets into the trust. By retitling your property and accounts in the name of the trust, you transfer ownership to the trust while maintaining control over your assets. In the event of your passing, the assets will be distributed according to the terms outlined in the trust document. Unlike a TOD account, a trustee is appointed to manage the assets upon your death or in the case of disability.
To ensure our client’s wishes are effectively carried out, we periodically review our client’s account titling and beneficiaries. By engaging in proper estate planning, you not only save your loved one’s time, hassle, and costs but also gain peace of mind, knowing that your assets will be distributed according to your intentions when the time comes.
