Make Your Own Plan to Pass Your Values

One of the biggest legal fallacies that I see clients hold is the belief that if they die, all of their assets go to a certain person automatically.  Most assume that if they are married, that their assets will go to their surviving spouse.  Absent a will or trust, however, that statement may not be true.

Property owned in joint tenancy will go to the other owner no matter who that owner is – whether it is a spouse, sibling, or child.  Many hold their homes and bank accounts in joint tenancy.  If you hold property like that, then you need to understand that the property becomes owned wholly by the surviving joint tenant upon your death.  Most commonly, I see older adults add one child as the joint tenant on a bank account in order to assist with the payment of bills.  When you do that, the bank account becomes owned by that child upon your passing – potentially bypassing your other children.

Property that has a pay-on-death designation will likewise go to the person named, regardless of who that person is.  Life insurance, IRAs, and most bank accounts are pay-on-death.  This means that you selected (or should select) one or more persons for the account to be paid to upon your death.  You may select any person, trust, or charity.  As an estate attorney, one of the biggest errors I see is incomplete or out-of-date pay-on-death designations.  When that happens, the account is effectively frozen and cannot be distributed without probate.  I recommend checking your accounts at least every three years to ensure that the designations are correct.

Finally, absent a trust, there is property that you own outright:  things like your cars, individual stock accounts, and personal belongings.  In that case, if you have not directed those assets to be distributed in a certain way through a will or trust, then the law will provide a distribution plan for you.  For example, statute states that if you are married then your estate will be split between your surviving spouse and children; or, if you have no children, then between your surviving spouse and your next-of-kin (parents or siblings).  Most of us find this surprising.  This law generally does not agree with what we would want.  However, with proper planning we can fix this distribution by signing a will or trust.

The other problem is that, absent a will or trust, inheritance to a minor child goes to them outright at 18.  In the meantime, the court often places the inheritance in a blocked account, requiring a court order to access it for things like a first car, school tuition, or extracurricular expenses.  Such limited access can cause problems for the surviving parent or guardian when faced with the financial challenges of raising your child, but there can also be significant problems with giving an inheritance to an 18 year old who may not be prepared to handle it.  With proper planning, we can arrange to have your child’s inheritance properly managed and available for his or her care, school, and medical needs.  You can provide clear direction as to what your goals are for your children instead of leaving it to a judge.

In short, you need to have your own plan.  Absent a will or trust, the state law’s plan for your assets probably does not reflect what you want for your family or children.  By making your own plan, you can ensure that you pass not only your valuables but also your values.

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