Account Titling and Estate Planning Document Updates

Account Titling and Estate Planning Document Updates
September 24, 2020

Account titling and beneficiary designations are two key yet often overlooked components of estate planning. Your estate documents will ensure your assets are distributed according to your wishes. However, your trust and will are only part of the framework you need to consider. Having your accounts titled properly and with accurate beneficiary designations will ensure your assets pass to your heirs in the way you intended and can also help reduce estate taxes.

Account Titling Options

Individual

  • One person or one entity
  • Passes according to estate plan as long as no competing beneficiary designation exists
  • Added to the total estate at death and subject to probate

Joint Tenant with Rights of Survivorship (JTWROS)

  • Multiple persons or entities, owned in equal shares
  • Upon death, passes directly to surviving account holder when first account holder dies
  • Titling supersedes a will
  • Avoids probate

Tenants in Common (TIC)

  • Multiple persons or entities, owned in proportion to amount contributed to the account
  • Upon death, passes via will (or by law if an estate plan does not exist)

Payable/Transfer on Death (POD/TOD)

  • Beneficiary designation added to an individually titled account
  • Upon death, automatically passes to named beneficiary
  • Avoids probate
  • Titling supersedes a will

Certain assets are passed to heirs exclusively via a beneficiary designation form, irrespective of instructions left in a will. Ensuring the beneficiaries on these accounts match your estate plan is crucial. These beneficiary designations will supersede any instructions left in your will. Beneficiary designations are applicable on the following accounts:

  1. Qualified Employee Retirement Plans
  2. Individual Retirement Accounts
  3. Life Insurance
  4. Annuities

As your life continues to evolve and change, it may be appropriate to update your estate plan and estate planning documents accordingly. This may include changing account titling, updating beneficiary designations, changing trustees and successor trustees, etc. We recommend you review your account titling and beneficiary designations at least every three years or around major life events (marriage, divorce, birth of a child, death). These changes should be done in concert with your estate planning attorney and advisor to ensure your desires are being properly addressed.

If you have questions about your specific situation, please contact your advisor. 

Sources: Wealth Management

* This article is for information purposes only and should not be considered investment or legal advice.  If you have specific investment or legal questions, please consult your financial advisor and/or lawyer.

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