Where there is a Will and there are other ways.

24 Aug, 2018//Posted by : admin//Category : Uncategorized

The modern estate plan, in most cases, contemplates inclusion of a living trust, a “pour over” Will that names the trust as beneficiary, and durable powers for assets and health care. The primary objective of the Trust, as most know, is to avoid the time consuming and expensive process involved in probating the estate through the local probate court. A worthy goal, indeed, and, assuming a properly funded trust with dutiful trustees and agreeable beneficiaries.

Transferring title to real estate is the most likely cause of initiating a probate court case. In California, there are “small estate” procedures wherein assets valued at less than $150,000.00 under current law may be transferred by affidavit or a simple petition with the court. However, in the current market, it is rare that any land, other than vacant desert property, fits under the $150,000.00 bar. Hence, the attorney preparing the estate plan usually makes certain that the client’s real estate holdings are transferred and remain vested in the trust. When the client passes, the real estate belongs to the trust, not the client, and probate proceedings are not necessary.

If a client owns nothing other than some small bank accounts and personal property, their heirs or the Executor named in a Will can collect those assets for distribution. In some situations, clients may have significant wealth and assets over the $150,000.00 limit, but own no real estate. These assets may consist of IRAs, 401Ks, life insurance products like policies and/or annuity contracts, or just accounts with financial institutions or investment firms. Sometimes the only assets are bank checking and savings or certificate accounts with large balances. Banks and financial institutions are more than willing to title those accounts as “TOD” or “POD”, which means that whoever the client designates as the beneficiary will be receive the account balance upon production of a death certificate and relatively simple paperwork. There is also no need for probate court orders to have insurance companies or IRA/401k custodians pay over their benefits to a properly designated beneficiary. In fact, beneficiary or pay-on-death designations on such accounts take priority over any other Will, Trust, or testamentary plan the client may have prepared. They comprise a contract made with the financial institution.

So, when there is wealth in cash or financial products, sometimes there is a way without a will or the need for a living trust to transfer such assets to children and/or other heirs. With these types of investments, the client is well advised to keep their beneficiary designations current with the custodian of the asset, whether a bank or other outfit, and do not assume that they will have such designations in their records, so copies of such should be maintained in the possession of the client and/or their counsel, if any. Too many times I have seen a decedent name their predeceased spouse as beneficiary of a life insurance policy, with no alternate beneficiary designation. If said policy is over $150,000.00, it is off to the probate court to get orders, which is always to be avoided, if not advisable for other reasons, and otherwise feasible.

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