Most estate planning attorneys would agree that one of the most common concerns among clients is the smooth transfer of assets to loved ones upon their death. Below are some essential facts for Orange County families and how they can avoid probate through careful planning and sound advice.
Joint Ownership vs. Beneficiary Designations: What Orange County Families Should Know
Joint ownership simply means that both parties own a specific account or parcel of real estate and share full access to it while living. Upon the death of one of the owners, full ownership is automatically transferred to the survivor. Although this is convenient, it is not without risk, as all the money can be withdrawn at any time by a joint owner, and legal judgments or debt may be attached to the account, regardless of which owner incurred the debt.
In contrast, beneficiary designations, whether payable on death, or POD, or transfer on death, or TOD, give you sole control during your lifetime. The beneficiary will automatically receive the assets upon your death but has no rights or access to the accounts while you are still living. This arrangement ensures that probate court can be avoided after you die.
Tip: It’s important to keep in mind that family conflict may arise if a beneficiary or joint owner is awarded a substantial amount, while siblings or other relatives receive much less. If you anticipate such conflict or a potential lawsuit over such factors, you can learn about additional options by contacting our office.
Why a Living Trust May Offer More Protection Than TOD or POD Accounts
If you have decided to use TOD or POD accounts instead of a trust, it is essential to understand the potential pitfalls associated with this decision. As previously mentioned, jointly owned accounts or property in Orange County may be vulnerable to either party’s creditors. For example, if someone has a married son or daughter who is titled as a joint owner of an account, and the married offspring’s spouse incurs debt, a judgment against the parent’s estate may be entered and the account garnished because it was held jointly with the son or daughter.
Another scenario where you may think you’re covered but your property could actually end up in probate is an unexpected order of death. For instance, a grandparent may use a TOD account with a grandson as the designated beneficiary. However, consider a possible situation where the two people die in a car accident. If the younger person dies first, but the grandparent dies shortly thereafter before the TOD can be changed, probate court could become necessary, and the grandparent’s assets may be distributed according to the state’s default rules rather than the grandparent’s wishes.
If you want to avoid such a scenario, the solution is setting up a living trust rather than relying on joint ownership or a TOD to pass title to assets at your death. You can also learn more about the benefits of estate planning and why a complete plan can help protect your family.
How Retirement Accounts, Life Insurance, and Beneficiary Designations Fit Into Your Estate Plan
Like many other Orange County residents, you may also be wondering how beneficiary designations, life insurance, and retirement accounts fit into your estate plan. These accounts typically pass directly to the adult beneficiaries named on those accounts or policies. This way, probate can often be avoided.
However, keeping beneficiary designations updated is crucial. This may include removing an ex-husband or ex-wife as a named beneficiary or getting any other changes you want put into writing prior to your death. Otherwise, your loved ones may have to spend unnecessary time and money straightening everything out. It’s also important to note that if a minor is named as your beneficiary, the assets are subject to a court process until he or she is of age.
If disagreements arise over who should receive assets or how those assets should be managed, our beneficiary rights page provides additional information about these types of disputes.
Why Every Estate Plan Needs an Updated Asset Inventory
Creating an inventory of your assets and keeping it updated on a regular basis should be a vital part of every estate plan. We realize the importance of this, which is why asset inventory is included in our unique Life & Legal Planning® process. Quite simply, if your assets are not properly inventoried, your loved ones won’t know what you have or where to locate it, and accessing it may ultimately be difficult and costly for them upon your death. In some scenarios, lost assets of this kind end up as unclaimed property in your state’s treasury.
Some experts estimate that approximately 77 billion dollars of unclaimed property has been left behind by over 33 million people. To ensure this unfortunate scenario is avoided, all Orange County residents should take inventory of their assets. Below are some examples of when those inventory lists should be updated:
- Retirement
- Starting a business
- Moving to a new state
- Marriage or divorce
- Death of a beneficiary
- Sale or purchase of significant assets
- Birth or adoption of a child
Our estate planning firm proactively reminds you to update your beneficiary designations and inventory to ensure no additional difficulties arise for your loved ones after you pass on.
How Lopiccolo & Heyde Helps Families Stay Organized and Protected
As your Personal Family Lawyer® Firm, Lopiccolo & Heyde will assist you in creating a comprehensive Life & Legacy Plan. This plan includes a simple, organized system that can be easily accessed by your loved ones if something happens to you. We’ll help you with titling your accounts appropriately, creating a proper inventory of your assets, and designating your beneficiaries.
We’ll also ensure that you have a thorough understanding of the various ownership structures available and the pros and cons of each. In this way, you have confidence that you’re making the best decisions for your loved ones’ unique situation. In addition, we’ll review your plan regularly to ensure it is the best one for you and that it works as intended.
If you are responsible for managing a trust or estate, you may also find our page on trustee duties helpful.
Call our office at (714) 997-7870 today to speak to an Orange County estate planning attorney and enjoy the peace of mind that comes from knowing your wishes will be executed upon your death without additional stress or extra expense to those you love. You can also request a consultation online.
