Reviewing Your Accounts and Property upon the Death of a Loved One

One of the primary guiding factors in estate planning is how assets are owned or titled. A goal in planning is usually to avoid assets being only in your name when you die. Otherwise, assets will be subject to probate, a costly, public, and time-consuming court process that can be avoided with proper planning. When a loved one dies, it is important that you review your accounts and beneficiary designations to be sure that the death of your loved one has not compromised your previously established plan.

Accounts with beneficiary designations, such as life insurance policies, retirement accounts, and annuities, will be distributed at your death, without probate court involvement, to the beneficiaries you have named. However, if you named only one beneficiary and that person predeceases you, the account will be distributed at your death according to the default rules in the policy or account agreement, unless you update the primary beneficiary designation or have named a backup beneficiary. The default rules may give the balance of the account or policy to your spouse, your heirs (as defined by state law), or your estate (which will require your loved ones to go through probate).

Some accounts allow you to name a beneficiary by means of a pay-on-death designation or transfer-on-death registration. These forms of beneficiary designation allow you to retain ownership during your lifetime but provide a way for the account to be transferred at your death to the named beneficiary outside the probate process. It is important that you know which accounts have these types of beneficiary designation. If your pay-on-death or transfer-on-death beneficiary predeceases you and you have no contingent beneficiary designated, it is important to update the designations so that probate can be avoided at your death.

One method of probate avoidance that can be used is to add another person to an account or a property’s title so that it is owned jointly with rights of survivorship or as tenants by the entirety. With this form of ownership, at the death of the first owner the surviving owner automatically owns the entire account or property without going through probate. If the co-owner predeceased you, it is vital to name a new co-owner or to consider other planning options, because you now own the entire account or property individually, which, without further planning, means that it will have to go through probate at your death.

If your estate plan includes a revocable living trust, you should have transferred ownership of most of your accounts and property (with some exceptions, such as retirement accounts) from yourself as an individual to the trustee(s) of the trust. Review your accounts and property and determine which should be owned by your trust. If your deceased loved one was named as a current or contingent trustee, title to the account or property should be adjusted, and the trust should be reviewed to determine if any adjustment is necessary.

If you inherited accounts and property from your deceased loved one, you must address these new items in your estate plan, along with any recently discovered or acquired new accounts or property. Depending on the nature and size of these new items, you may need to consider modifying your existing estate plan or adding an additional planning tool, such as a special trust. If you are able to name a beneficiary for the account, be sure to do this as soon as possible.

Have you completed your estate plan?

If you began the estate planning process but did not finish it, or if you have discovered accounts or property that now need to be planned for, act now. Without an estate plan in place, the court will make all of your decisions for you based on state law. The court will decide:

  • who will receive your money and property at your death,
  • how much each person will receive, and
  • when each person will be entitled to receive the money and property.

We can guide you through the process.

We are here to help you review your accounts and property to ensure that you and your loved ones are protected. Give us a call today to schedule a virtual or in-person consultation. We can discuss the types of accounts and property you own, what will happen to them when you pass away, and how you can leave a lasting legacy.