Inheritance isn’t a given even for your closest relations
At Askin & Hooker we understand that life moves fast. People are busy and our to-do lists seem to get longer every day. The last thing most people are thinking about is creating or updating their estate plan. However, neglecting that important planning step could mean that your loved ones do not receive the inheritance you thought they would. Now is the time to move planning your estate to the top of your to-do list.
What you may not know:
- The beneficiary designations on certain assets such as retirement accounts and life insurance policies override the terms of a will.
What this means:
- If you haven’t updated the beneficiaries on the retirement account you set up ten years ago before you had children, they might not receive the account upon your death. Or if your life insurance policy’s beneficiary was your ex-spouse, the account could pass to them instead of your two children who you designated as heirs in your will.
It’s important to update all of your assets after any major life change, including marriage, divorce, the birth of a child, or the death of a beneficiary or fiduciary named in your estate planning documents. Make sure what you’re putting in your will won’t be superseded by another document you’ve forgotten about.
Avoiding Probate and Limiting Taxes for Your Heirs
Probate is the process the court takes after your death to settle your legal and financial affairs. If you do not have a will or have not arranged your estate so that your heirs may avoid probate, this can be an extremely costly, time-consuming, and often emotionally-draining process for your already grieving loved ones.
So you have a will, and you’ve gone back to check all the beneficiary designations on your assets to confirm that they coincide with the terms of that will. What else can you do to help your loved ones bypass probate and potentially lessen their taxes?
What About Joint Ownership?
There are a few options for owning assets with a spouse, civil union partner or others. All of them offer an undivided right to use and enjoy real or personal property, and they are fairly easy to set up. Most forms of joint ownership allow for easy transfer of the title upon one owner’s death. In the case of joint tenancy with the rights of survivorship, when one owner dies, the asset is simply transferred to the surviving owner(s), avoiding probate. Tenancy by the entirety is similar, though it only applies to married couples and civil union partners and provides an added layer of protection from judgment creditors and lienholders. However, in the matter of tenancy in common, when one joint owner passes, that owner’s interest in the property automatically becomes part of his or her estate and will be passed on according to his or her will. This type of joint ownership is more likely to lead to more complex probate issues and the possibility of litigation.
What Does Transfer on Death/Payable on Death Mean?
Naming someone as a transfer on death (TOD) beneficiary or a payable on death (POD) beneficiary will also allow your heirs to bypass the probate process. A TOD/POD beneficiary can be named on financial accounts, including bank savings or checking accounts, investment accounts, vehicle titles, and real property, though only in some states. Estate taxes may still have to be paid on TOD assets. A TOD/POD named beneficiary overrides the terms of a will however, so it is important to again make sure your beneficiaries and heirs are the same across all parts of your estate plan.
Whether your estate is complex or straight-forward, the attorneys at Askin & Hooker, LLC can help you insure that your will and assets are set up correctly. When you have a well-planned estate, you can rest assured knowing that your loved ones will be secure no matter what may happen in the future. Contact us today at 973-729-7711 for your appointment.