Common Estate Planning Questions Part 1 of 2 – How to Handle Your Assets

When it comes to estate planning, we receive many questions about many topics. One of the most common questions we hear concerns account ownership and asset management. Understanding how accounts are titled and who has access to them isn’t just about convenience—it’s about ensuring your assets transfer smoothly to your loved ones while protecting them from potential risks.

In this first installment of a two-part series, we will answer the most common questions about asset ownership and management. We will also outline ways in which you can make things as easy as possible for your family after your death. Let’s begin with a question about joint assets.

Q: What’s the difference between joint ownership and transfer-on-death designation?

A: Joint ownership means both parties have full access to and ownership of a specific account or piece of real estate, while living. When one owner dies, the surviving owner automatically receives full ownership. This can be convenient, but comes with risks. For example, a joint owner can withdraw all the money at any time, and the account could be vulnerable to either joint owner’s creditors or legal judgments.

On the other hand, transfer-on-death (TOD) or payable-on-death (POD) beneficiary designations give you sole control during your lifetime. Your designated beneficiary has no access or rights to the account while you’re alive but receives the asset automatically upon your death. This arrangement prevents another person from accessing your assets while you’re alive and also avoids the court process – probate – after you die.

One important note:  When you have a joint owner on your account, or a designated beneficiary, that person will receive all the funds after you die, no matter how old they are or what your family dynamics are. This can create conflict in your family or can cause someone who’s fiscally irresponsible to potentially inherit a windfall with no safeguards.  Lawsuits are often filed by disgruntled siblings who find out that the caretaker sibling receives all the money in a parent’s account (or sole title to real estate) rather than being distributed equally among all siblings.  If this is a concern to you, read on to find out how you can book a call with us to learn about your options.

Q: If I hold my property jointly, or use a TOD or POD, do I need to have a Trust?

If you use joint ownership or TOD/POD instead of a Trust, you need to consider some traps for the unwary. First, as indicated above, jointly owned property could be at risk from creditors of either party.   For example, there was a situation where a client titled her bank account with her granddaughter as joint owner. When the granddaughter’s husband didn’t pay the bill on the copier contract for their business, the copier company sued and got a judgment against both he and the granddaughter as guarantors for the copier contract. As a result, the grandmother’s account was garnished because it was also in the granddaughter’s name.

Suppose you use a TOD or POD to avoid a scenario like that. In that case, the problem is that the TOD/POD only operates in the event of death, not incapacity. As such, the TOD/POD could result in the wrong person ending up receiving the assets, or the assets ending up in probate if there is an unexpected “order of death” issue. For example, suppose a grandmother leaves her house to her grandson using TOD, and then both are involved in a car accident together. The grandson dies first, with the grandmother dying shortly thereafter. Who would then be entitled to the property, and how? In this case, the property would have to go through probate and pass to the grandmother’s “next of kin” according to the state intestacy statutes. Given that the grandmother intended to leave her property to her grandson, it’s likely she didn’t want the “state’s plan” for her assets.

The solution is not to use joint ownership or a TOD/POD to pass title to assets at your death. Instead, allow us to set up a trust and retitle the property in the name of the trust, ensuring that what you leave behind is transferred properly to your loved ones.

Q: What happens to retirement accounts and life insurance policies after death?

A: These accounts pass directly to your named beneficiaries, bypassing probate and any instructions in your will, as long as you have named beneficiaries, and provided that you haven’t named a minor as a beneficiary. This is why keeping your beneficiary designations up to date is crucial. If your beneficiary designations are outdated – listing an ex-spouse or deceased person, for example – your assets might not go where you want them to go. Even worse, if you have no beneficiary listed, these accounts will then have to be put through probate, costing your loved ones unnecessary time and money. If you’ve named a minor as a beneficiary, the assets will be subject to a court process to hold the assets under court order until your minor beneficiary is “of age” – usually 18 or 21, depending on state law.

Q: Do I need an inventory of my assets?

A: Yes. It’s critically important that you create an inventory and keep it up to date. We include this in our IDLegacyô estate planning options because it’s one of the most important parts of the planning process. Surprisingly, it is not part of most traditional lawyers’ estate planning or legal insurance plans. Our unique IDLegacyô estate planning  process includes an asset inventory because if you don’t inventory your assets, your family will not know what you have, how to find it, and how to access it as easily and affordably as possible.

It is important to note that lost assets end up in your state’s treasury as unclaimed property. According to the National Association of Unclaimed Property Administrators, approximately 1 in 7 people in the U.S. – or about 33 million people – have unclaimed property totaling approximately $77 billion dollars. If you want to ensure that your assets go to the people or charities you want rather than to your state government’s unclaimed property fund, you need an asset inventory. And it must stay up to date.

Q: How often should I review my asset inventory and account designations?

A: Your inventory and beneficiary designations need to be kept up to date over time so they reflect your current circumstances when you die. Your IDLegacyô Estate Plan includes regular, ongoing reviews of your asset inventory so no asset ever gets lost.

It’s also important to update your asset inventory and account designations whenever you experience a major life event such as:

• Marriage or divorce
• Birth or adoption of a child
• Death of a beneficiary
• Purchase or sale of significant assets
• Moving to a new state
• Starting a business
• Retirement

When you work with us, you won’t have to remember this on your own. We will proactively remind you to update your inventory and beneficiary designations and help make it as easy as possible for you to take action.

Q: What’s the best way to organize and store my asset information?

A: Create a clear, organized system that your loved ones can easily access if something happens to you. However, be careful about including sensitive information like passwords in your will, as it becomes public record after death. Instead, consider keeping this information in a secure location and telling your trusted family members, executor, or trust administrator how to access it.  We will help you explore options for the best way to do this when we work together.

How We Help You Get Organized and Protected

As your Personal Family Lawyer® Firm, we help you create a comprehensive IDLegacyô Estate Plan that includes a complete asset inventory, proper account titling, and coordinated beneficiary designations. We’ll help you understand the implications of different ownership structures and guide you in making the best choices for your family’s unique situation. Plus, we’ll help you keep everything updated through regular reviews, ensuring your plan continues to work as intended. You will have peace of mind knowing that your assets will go to the people you want, in the way you want.

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This article is a service of The Carmona Law Firm, P.A., a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a comprehensive ID Legacy Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule an ID Legacy Planning Session™