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Double Check: Will Your Assets Be Passed to the Right Person?

It’s crucial that you understand how your assets will be distributed when you die so you can take steps now to make any needed changes. Below are some key things to consider when it comes to asset titling.

Many estate planning objectives can be accomplished by utilizing asset titling strategies. Assets that don’t pass to someone else as a named beneficiary or because of having joint or successor title to the property become part of the estate which must go through probate. Probate is time consuming, costly and a public process that can possibly be avoided using an asset titling strategy.

You should verify your designated beneficiaries each year as it is not uncommon for old paperwork to be lost and there to be no designated beneficiary on record when you pass away. When this happens, your entire asset goes into your probate estate.

One overlooked issue is that if there is no named beneficiary and no joint owner with the right of survivorship and no will, that the asset goes to whoever the state law designates as entitled to it and that person may not be who you intended.

In New York State, if you die with a spouse but no descendants, your spouse inherits everything. If you have a spouse and descendants (children, grandchildren, or great-grandchildren) by statute your spouse inherits the first $50,000 of your intestate property and half of the balance. The descendants inherit everything else. This could be seriously detrimental if your spouse needs the other half of the assets to live on. If your child passed away before you but has a child, this grandchild would receive their share.

If you have children, but no spouse your children inherit everything. If you were helping to support your parents, that would cease.

If you die with parents but no spouse or descendants your parents inherit everything. Do you want your assets going to their choice of heirs?

If you die with siblings but no spouse or parents your siblings inherit everything.

Things get even more complicated with decedent children when things are not perfectly clear. Adopted children will inherit just like a biological child, foster children and step-children will not inherit unless they were legally adopted. Children born outside of marriage will inherit from a male decedent if paternity is established. Grandchildren will inherit only if their parent dies before the decedent.

If the decedent has no first cousins or descendants of first cousins then the property will go to New York State.

Some assets avoid probate by having a designated beneficiary such as retirement accounts and life insurance or using a grantor trust. Others can go to your designated beneficiary just as easily by making someone a joint tenant with the right of survivorship. In this situation, the joint owner becomes the new owner when one person dies. Similarly, between married couples, you can use tenancy by the entirety with real property.

Keep in mind that if you do add someone as a joint tenant to an account or asset, that in doing so, it is a gift and a gift tax return may need to be filed depending on the size of the account.

By changing the title to an asset you can change who receives the asset after you die.

In conclusion, to ensure your assets will pass based on your plans and desires, you need to verify your designated beneficiaries, analyze how your assets are titled, and create a will. Taking these steps will give you peace of mind and ensure that your loved ones are taken care of after your gone. Reach out to our experts today to discuss and review your personal situation.

These comments and suggestions are provided to assist you in developing an effective estate plan in conjunction with your attorney. No decisions with regard to beneficiary designation, titling of property or preparing a will should be made without consulting your attorney.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute an accountant-client relationship.