Wills are one of the most common thoughts of items when estate planning is brought up. After all, a will controls who gets what when one does. This is true in theory however in practice there are a few shortcomings will poses. The will is only one way to transfer assets at death and, without knowing it, you may already have your estate to be arranged to pass to your loved ones with will substitutes.
Rights of Survivorship
Property owned with “rights of survivorship” passes down automatically after the death of a person. For better or worse, this is the case regardless of the terms set in place in the original owner’s will. Property owned with rights of survivorship is known as “joint tenancy with the rights of survivorship.” For example, John’s will might say everything goes to his daughter Jane. However, John owns his home with Ruth as JTROS. Upon John’s death, the home will go 100% to Ruth, regardless of what his will said.
The rule on rights of survivorship can apply on all types of assets, including stocks, bonds, and real-estate. However, it is important to know that these jointly owned assets are also accessible to your loved-one BEFORE you pass away.
Payable or Transferrable on Death Designations
Contracts made during one’s life is another way property can be transferred after death. Life insurance death benefits pass by the contract that is made with the insurance company. Part of the contract related to insurance is the payout to a beneficiary upon the death of a loved one. The will then does not affect life insurance since it is already in a contract.
U.S. savings bonds can also be registered with a “pay on death” provision. These bonds will be yours while you are living, then automatically pass upon your death to the beneficiary noted on your bonds.
This type of registration has been available for a long time. The law known as “Uniform Transfer on Death Security Registration Act” is an option with stocks and bonds. This allows owners of these securities peace of mind that they can pass these assets on to whomever they want. These ‘Transfer on Death’ accounts relieve any need for probate. This does not require giving up partial control while you are alive unlike joint tenancy discussed above. This process can cut down on estate planning costs and ensure that you and your family are protected, but this planning is not for everyone and can have some serious disadvantages which need to be discussed.
The best way to protect your family is to consult your local elder law attorney. They will make sure that you have the best plan of action for your future.
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Jamison Bonds, VA Accredited Attorney
One of the many benefits of being an elder law attorney is getting to work with selfless clients who act not out of their own self interest, but out of a deep concern for the people they love. That’s why I love helping families enjoy peace of mind and protect their hard-earned assets.
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