More times than we would like, we see two common estate planning oversights that can lead to unnecessary disputes and hard feelings and, in some cases, added expense.
The first oversight deals with someone who leaves her property one way in her will, but has created joint tenancy accounts or transfer on death accounts that disposes of the property in a different fashion. Assume Aunt Sally leaves a nice big bank account to her nephew in her will, but has titled the account at the bank to transfer on her death to her brother. On Aunt Sally’s death, the transfer on death account will pass by statutory language and not through probate the funds in the account to her brother and not to her nephew. This is why we recommend that clients check periodically to make sure what they provide in their wills is not inconsistent with how they have titled their assets.
The second oversight often arises in situations where a client has a trust. Assume that instead of a will, Aunt Sally has a trust (along with what is called a pour-over will) to dispose of her property upon her passing. Unfortunately, Aunt Sally never gets around to titling her various assets intended to be a part of the trust. On her passing, that means her personal representative will need to open a probate proceeding so that all of the assets go through the probate process before being distributed to her trust. This results in the worst of all worlds for Aunt Sally and her beneficiaries as she has incurred the cost of setting up an elaborate trust at considerable expense only to have the beneficiaries bear the expense of a probate proceeding. A double whammy!
This is why we recommend to clients that they periodically check to make sure that the assets they want to be titled to the trust have been, in fact, titled to their trust. Now there can be circumstances where that is not desired, but that is the subject of another blog.
These two seemingly simple oversights can often lead to a great deal of financial and emotional pain downstream, which I’m sure are never intended. If you have any concerns in this area, please let us know.
Michael W. Margrave
Disclaimer: This blog is for information purposes only. Legal advice is provided only through a formal, written attorney/client agreement.