The Basics - Estate Planning

Basics, that is, of asset titling. There's a whole lot more to the estate planning process, of course, but it is crucial to always keep in mind asset title and the effect of each. The form of title to each asset dictates how, and to whom, each asset passes upon death.

>> Assets in decedent's sole name. These pass in accordance with the decedent's Will; these are probate assets. The probate process applies only to assets titled in the decedent's sole name... unless an "operation of law" exception applies.

>> "Operation of law" exceptions to assets tiled in decedent's joint name.

>>> Assets with a named beneficiary, such as life insurance or retirement accounts. It is possible, although generally not the preferred approach (especially with retirement accounts), to name decedent's estate as the beneficiary.

>>> Assets (accounts) with Transfer on Death (TOD) designation. Some investment accounts offer what is essentially a beneficiary designation for investment accounts. Tread lightly - seemingly good advice to add a TOD designation to an account for probate avoidance may be shortsighted...and may end up defeating a well-thought out structure.

>>> Joint tenants or Tenants-by-the-entirety (joint assets with "survivorship"). These assets pass to the surviving joint owner, outside of probate...tenancy-by-the-entirety being reserved for such ownership by a married couple, and is often how the principal residence is titled.

>> Tenants-in-common (joint "without survivorship"). In this type of joint ownership, each co-owner owns a portion (usually a pro-rata portion) of the whole; and each owner's share will pass at his/her death in accordance with how that share is titled.

>> Assets titled in a trust. By this point, I suspect you know... assets titled in a trust will pass in accord with the terms of the trust. Often, a Will "pours" all probate assets to the decedent's trust... by titling assets that would otherwise be titled in decedent's sole name and pass thru the probate process in the name of the "pour-over" trust, the probate process can be circumvented.

Keep in mind how each asset will pass at death, be sure the designation is in line with your intent and plan design, and make changes only after careful consideration. Keep in mind also that the point of this piece is instructional only - and not to advocate for any one type of title. The "right" title for each asset is the one that gets the job done with the greatest efficiency possible under the circumstances.

This blog is not intended to constitute, and does not constitute, legal advise to anyone or any specific situation. See also our legal notices.