Forbes’ recent article, “For Estate Plan To Work As Intended, Assets Must Be Properly Titled” notes that with the exception of the choice of potential guardians for children, the most important function of a will is to make certain that the transfer of assets to beneficiaries is the way you intended.
However, not all assets are disposed of by a will—they pass to beneficiaries regardless of the intentions stated in the will. Your will only controls the disposition of assets that fall within your probated estate.
An example of when a designated beneficiary controls the disposition of a financial asset is life insurance. Other examples are retirement accounts, such as a 401(k) or an IRA. When there’s a named beneficiary, assets will be distributed accordingly, which may be different than the intentions stated in a will.
The title of real estate controls its disposition. When property is jointly owned, how it is titled determines if the decedent’s interest in the property passes to the surviving partner, becomes part of the decedent’s estate, or passes to a third party. Titling of jointly owned property can be complicated in community property states.
In the same light, a revocable trust is an inter vivos or living trust that’s created during the grantor’s life, as part of an estate plan. If your live in California and have assets over $150,000, we recommend that you have a trust to provide for the manage of your assets if you should become incapacitated and after your death. A will only deals with the disposition of assets at your death. Furthermore, such a trust can be used to ensure privacy, avoid the expenses and delays in the probate process, and provide for continuity of asset management. A critical part of the planning is that the grantor (person who creates the trust) must transfer (or retitle) assets to the trust.
Wills are very important in estate planning, but not the end. It's also important to have a Power of Attorney to assist in management of assets as well as an Advanced Health Care Directive naming someone to make medical decisions for you if you are unable to do so for yourself. To ensure that your estate plan fulfills your intentions, talk to an estate planning attorney about the proper titling of your assets.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: Forbes (May 20, 2019) “For Estate Plan To Work As Intended, Assets Must Be Properly Titled”