Attorney & Mediator
Attorney & Mediator

Not Accounting for Assets Properly

A common misconception when doing estate planning concerns what your Will or Trust covers.  This can dramatically alter the distribution of your estate.

A Will controls those assets that are in your name alone at the time of your death.  Therefore, assets that you own jointly with another are not subject to the terms of your Will.  This is important to know because if you place assets such as savings or checking accounts into joint ownership with one family member, those assets will not be subject to the distribution scheme set forth in the Will.  The joint owner will gain the asset at the time of your death.

Additionally, life insurance , IRA’s, Roths, 401K’s and similar accounts, have beneficiary designations.  These assets are not a part of your probate estate and are not controlled by your Will.  The individuals you have named as beneficiaries on each of these assets will receive them upon your death.

This is important if you are counting these assets as part of your estate when you set up a distribution scheme.  You may believe that the Will can ultimately control all of your assets when in fact it will only control the assets in your name alone at the time of your death.  Without this knowledge your distribution scheme can go awry.

Similar problems arise with a Trust.  It only controls the assets that are titled in the name of the trust.  It also will not control your IRA’s, 401K’s, Roths, and similar accounts.  It will also not control assets that are not titled in the name of the trust.  Accordingly, your plan as to division of all of your assets may once again be altered by the fact that some of the assets are not subject to the direction of the trust.

Understanding your assets and how each of them can be handed down to future generations will assist in assuring that your estate planning goals will be followed.

You are the Agent under a Power of Attorney and the individual dies. What are you Permitted to do then?

Simple answer: NOTHING.

A Power of Attorney is only good during an individual’s lifetime. When the person dies, their Power of Attorney dies as well – that instant.

This means that you are not to run to the bank and withdraw cash using the Power of Attorney. You are not supposed to keep paying bills off of his or her account after the individual dies. You are not to use his or her charge card.

Who has authority over the decedent’s money? If they have a trust, their successor trustee will have this power. If they don’t have a trust and they have a Will or if they don’t have a Will, no one has any authority over their funds and property until a Personal Representative is appointed by the Probate Court.

If you are named as the Personal Representative in a Will, it does not mean that you have authority the minute they die. It is a nomination. It is not effective until the Probate Court says that it is effective.