Estate Planning starts with “What do you own, How do you own it and What is it worth?”


You can have an attorney prepare a perfectly good Last Will and Testament and still not know who is going to inherit your property at death.  That’s because your Will does not control all of your property.  For example, if you are married and own a home, it is likely your home is owned jointly with right of survivorship with your spouse.  This means that if you are the first to die, your spouse owns the home in full, regardless of whether your Will says something else.  The same is true of bank accounts or other financial accounts owned jointly with survivorship.  However, don’t assume that because an account is owned jointly that it passes to the surviving owner, because accounts can be owned jointly, without survivorship.  In that case, the part that was owned by the person who died is controlled by that person’s Will.

Understanding this, and working through the details of how everything you owned is titled, is the first step of effective estate planning.  No attorney can know who will get your property at death merely by reviewing, or for that mattter, writing, your Will.

This is why you cannot really have effective estate planning without beginning by disclosing and discussing with your attorney three things:  (1)  what you own;  (2)  how this property is titled (or how beneficiary designations on retirement accounts or life insurance contracts are set up);  and (3)  what these various things you own are worth?  You lawyer doesn’t even know if the document he is preparing controls a particular asset until he understands how it is owned.

A lot of people ask me about probate avoidance.  Probate is the court supervised process of transferring the ownership of your property at death.  For most people, probate avoidance will make things simpler and less expensive for those you leave behind at death.  However, probate only relates to property that is controlled by your Will, so probate avoidance amounts to planning to have your property controlled effectively and efficiently by something other than your Will.

If this sounds complicated, sometimes it is.  It really helps to work with someone who is experienced, and understands not only the legal documents, but the way all of the financial arrangements work.  A lot of assets will never be probate assets unless other than through mistake or inattention.  For example, life insurance policies, retirement accounts and pay on death bank accounts will pass to a properly designated beneficiary or beneficiaries at death, outside of probate.  One of the most common methods of probate avoidance is the use of a Trust, often called a Living Trust.  If you set up such a trust, you control your assets through the trust during your life, and then the terms you established in the trust define the use and distribution of your assets upon your death.  I like to think of this kind of trust as a “management trust.”  It is a really efficient way to define who manages your property and who gets your property, and serves to bypass the probate process as well.

The key thing to remember is that without planning, your estate likely consists of both probate and non-probate assets. With proper planning, you can control whether your assets are probate assets, while at the same time saving money and making things more simple for those who take care of your affairs at death.  It is a good idea to review how you own you assets and to review the beneficiaries on all of your retirement accounts and life insurance policies to makes sure they are what you want and fit your plan.

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