Have your avoiding probate plans interfered with your estate planning? If you’re like most people, you’ve probably been given heaps of advice from well-intentioned folk such as account managers, customer services, financial institution employees, etc. about how to how to title your accounts, name beneficiaries, and even avoid probate altogether. However, this kind of advice, no matter how well-meaning, if followed, could lead to all kinds of problems when it comes to your estate planning.
When opening a new bank account, for example, the forms ask you to name a beneficiary in the event of your demise; this is all well and good but what happens to your assets if your named beneficiary predeceases you? Will their descendants receive the original beneficiary’s share of your assets, or will it pass to another you have named? You need to pay attention to who you designate as a beneficiary on your financial accounts.
Do you have a clear idea of you intend, regarding the divvying up of your estate? It’s critical to make sure that these kinds of forms, where you are designating beneficiaries, are filled out correctly, and with care, especially if your plan is to avoid probate.
Avoiding probate can be achieved by accurately designating beneficiaries, or by using a revocable trust; the latter usually simplifies any need make changes to beneficiary designations, for example, in the event of a marriage or divorce, a birth or a death of a member of your or their family. A probate lawyer will be able to help you do this properly.
With a revocable trust, it allows you to easily modify just one document, which is designed to look after all of your accounts. This simple solution could also be of great benefit to those whose partner or spouse later becomes incapacitated through illness or an accident (for example); if the revocable trust has been drafted so that the authority to make amendments is given to the healthy spouse, it removes the need for the signature of the incapacitated one.
It should be remembered, however, that in order to be effective, the revocable trust must be fully-funded by assets which would normally require probate; this includes assets titled in your name only, which are neither co-owned by anyone else, nor have a payable on death designation. Included are assets which are jointly-owned with someone else as a tenant in common, which have not been funded into the revocable trust.
As long as at least one designated insurance beneficiary survives you, the revocable trust would not include any life insurance policies or retirement accounts; these include IRAs, annuities, and 401(k)s.
In planning your estate, it’s paramount to recognize the benefits (and drawbacks) of designating beneficiaries as a means to securing your wealth for your family. Having a revocable trust and designated beneficiaries are just two methods of estate planning at your disposal in order to avoid probate.
For more information on revocable trusts, estate planning, and probate disputes in Forest Hills and throughout Brooklyn, Queens, Nassau, and Suffolk counties, call Richard Cary Spivack on 718.544.1000 or contact me online to schedule a free initial consultation.