A Will Is Only The Beginning
Often people think they have resolved estate planning issues once they have drafted a will. This is one reason such services as Legal Zoom can be so popular. Actually this is just the beginning. People can also hire a estate planning attorney if there are any issues with estate planning.
Sometimes I try an experiment drawing a line down the center of our whiteboard and writing “Probate” on one side and “Non-Probate” on the other. I then announce we have resolved only what was on the “Probate” side of the board. The vast majority of the assets often are “Non-Probate.”
One of my clients exclaimed jokingly “You have just ruined my day.”
What does this mean? Even experienced financial advisers when speaking to audiences sometimes suggest that listeners can assure their assets are distributed as they want on death by preparing wills without ever discussing titling of assets or beneficiary designations.
Probate assets are those that are distributed under the terms of a will.
Non-probate assets pass by other means typically joint titling or beneficiary designations on retirement funds such as IRA’s or beneficiary designations under life insurance or annuity policies or funds held in trust, or transfer on death (TOD) or payable on death (POD) accounts.
Wills are not the only way to provide for the transfer of assets on death. A study conducted several years ago in the U.S. determined that more than half of assets in America do not pass by will but by joint titling, beneficiary designations and trusts. It does not matter what the will says where titling and beneficiary designations take precedence.
If a will is used to distribute assets on death, this is a valuable first step but, without considering asset titling, the job is half done. Titling and beneficiary designations are critical. The idea that titling affects final distribution can be particularly troubling for seniors. Most husbands and wives are accustomed to titling assets jointly.
When one of them dies, the survivor considers adding children to the account so that a trusted family member will also be able to pay bills and make deposits. They may not realize that joint titling can change their estate plan. While a power of attorney will accomplish the same objective of allowing the child to pay the bills without changing the title, the senior might think that she could avoid this step by establishing a joint account.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.