Timothy Barry | October 28, 2020
Today, uncertainty pervades our lives and the sense of our mortality is undeniably evident. Many people are taking the opportunity to review and update their estate plans as preparation for what lies ahead. This is a good thing. Unfortunately, estate plans can be tripped up by not paying attention to how assets are owned. Not only can this oversight result in additional cost to your estate but it can also lead to assets passing contrary to your wishes. Let’s look at two examples of potential mischief.
- Your estate attorney recommends a revocable living trust to avoid probate and to provide for the management of your assets in case of your incapacity, among other things. You take your attorney’s advice and set up the trust. Your attorney informs you to retitle your assets in the name of the trust. You promise to do so, but with so many other things competing for your attention, you never get around to doing it. If you die before retitling the assets, the untitled assets will likely need to go through probate. This will cost your estate money and will expose your assets to public scrutiny. If you become incapacitated before retitling the assets, there may be an undue delay in the management of the untitled assets. Had you retitled the assets before your death or incapacity, your trust would have provided the promised benefits.
- Your will provides that your assets are to be split equally among your three children. You have several bank accounts and you decide to list your oldest child on some of the accounts for convenience purposes should something happen to you. The bank asks if you would like your oldest child to be a joint owner and you say yes. You have just unwittingly compromised the terms of your will. When property is owned jointly (also known as “joint with right of survivorship”), the property passes directly to the other owner upon death and bypasses the terms of your will. While you thought you were leaving your property equally to your children, a disproportionate amount was left to your oldest child.
Mistitling assets can have negative ramifications aside from the examples above. It is important to complete your estate planning by titling your assets to work with your estate plans and not against them.
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