How to Ensure Your Assets are Properly Titled for Your Estate Plan

Through a will, you can appoint a guardian for your minor children and set up a testamentary trust for your children. A will’s primary purpose in an estate plan is to ensure your property is distributed after your death in accordance with your wishes. Many individuals who have a will might assume that they need not take any further steps to safeguard their estate plans. However, some property does not pass through your estate. It may pass directly to a beneficiary or a joint owner. Therefore, discussing how your property is titled with your Maryland estate planning attorney is as important as discussing the terms of your will.

Property That Passes Directly to Beneficiaries

Some assets pass directly to named beneficiaries instead of passing through your estate. Alternatively, you can designate your estate as the beneficiary of the property. In that event, the property passes through your estate and your will dictates the distribution of the property to heirs. However, individuals typically designate specific beneficiaries to avoid probate (and creditors) for these assets.

Examples of assets that pass directly to a beneficiary include:

·       Life Insurance Policies

·       Individual Retirement Accounts (IRAs)

·       Pensions

·       401(k), 403(b), and other similar retirement accounts

·       Some brokerage and financial accounts

·       Annuity Accounts

Because retirement accounts could have special rules regarding mandatory distributions, it may, or may not, be wise to consider naming a trust as the beneficiary of your retirement account. Utilizing a trust as the beneficiary allows you to have more control over the distribution or use of the asset and may avoid a tax burden for your heirs.

Real Estate and Your Estate Plan

The deeds to your real estate control the disposition of the property upon your death. A fee simple interest in real estate titled solely in your name becomes part of your estate to be distributed according to the terms of your will. However, if you hold title to real estate jointly with another party, how the property is titled determines the disposition of your interest in the real estate upon your death.

Because there are several ways to title real estate that can bypass a will, it may be wise to discuss the best ways to title real estate with your attorney to ensure the individuals you intend to receive your interest in the property actually receive title upon your death.

Your interest in fee simple title held jointly with another person as tenants in common passes through your estate. However, if you hold title with another party as joint tenants with right of survivorship (JTWROS), your interest in the real estate passes directly to the other owner(s) upon your death. Because there are several ways to title real estate that can bypass a will, it may be wise to discuss the best ways to title real estate with your attorney to ensure the individuals you intend to receive your interest in the property actually receive title upon your death.

Accounts with POD and TOD Designations

POD (payable on death) and TOD (transfer on death) designations can transfer certain accounts directly to another party upon your death. The POD and TOD designations supersede any instructions in your will. These designations can be useful when you do not want a person to have access to an account during your lifetime, but you want the account to pass directly to this person upon your death without involving the probate process.

POD (payable on death) and TOD (transfer on death) designations can transfer certain accounts directly to another party upon your death.

Contact a Maryland Estate Planning Attorney to Discuss Your Estate Plan

Reviewing beneficiary designations and title to assets is an important step in developing an estate plan. A Maryland estate planning attorney can help you develop a plan that meets your needs and accomplishes your goals for your heirs and loved ones. Contact Thienel Law today. Maryland estate-planning attorney Steve Thienel is dedicated to assisting clients in Maryland, Virginia, and throughout the DC Metro area.