Reviewing Your Accounts And Property Upon The Death Of A Loved One

The Importance Of Reviewing Your Accounts & Beneficiary Designations For Your Estate Plan

How your accounts are owned makes a big difference in estate planning. The main objective is usually to ensure that no accounts and property are in only your name when you die. Otherwise, they will be subject to probate, a costly, public, and time-consuming court process that many people prefer to avoid. Therefore, it is important that you review your accounts and beneficiary designations to be sure that the death of your loved one has not compromised your previously established plan.

Accounts with beneficiary designations, such as life insurance policies, retirement accounts, and annuities, will be distributed at your death, without probate court involvement, to the beneficiaries you have named. However, if you named only one beneficiary (the primary beneficiary) and that person predeceases you, the account will be distributed at your death according to the default rules in the policy or account agreement unless you update the primary beneficiary designation or have named a backup (contingent beneficiary). These default rules may give the balance of the account or policy to your spouse, your heirs (as defined by applicable state law), or your estate (which will require your loved ones to go through probate).

Similarly, some accounts allow you to name a beneficiary via a pay-on-death designation (cash accounts) or a transfer-on-death registration (investment, brokerage, or stock accounts). These forms of beneficiary designation allow you to retain ownership but provide a way for the account to be transferred at your death to the named beneficiary outside the probate process. It is important that you know which accounts have these types of beneficiary designation: if your pay-on-death or transfer-on-death beneficiary predeceases you and you have no contingent beneficiary, you need to update the designations or face the account being subject to probate.

In some cases, to avoid probate, you may have added another person to an account or a property’s title so that it is owned jointly with rights of survivorship. This form of ownership means that at the death of the first owner, the surviving owner automatically owns the entire account or property without going through probate. If you are relying on this method to avoid probate and your co-owner is deceased, we need to discuss other planning options because you now own the entire account or property individually, which, without further planning, means that it will have to go through probate at your death. The same rule applies to any property you may own with your spouse as tenants by the entirety. If your spouse is deceased, you are now the sole owner and will need to consider other planning options for the property if you intend to avoid probate.

Revocable Living Trust & Transferring The Ownership Of Your Property

If your estate plan includes a revocable living trust (RLT), you should have transferred ownership of most of your accounts and property (with some exceptions, such as retirement accounts) from yourself as an individual to the RLT. Review your accounts and property and make sure that your RLT is the owner of the accounts and property discussed above.

If you inherited accounts and property from your deceased loved one or recently discovered or acquired new accounts or property, you must address these new items in your estate plan.
Depending on the nature and size of these new items, you may need to consider modifying your existing estate plan or adding an additional planning tool, such as a special trust. If you are able to name a beneficiary for the account, be sure to do this as soon as possible.

Finish Your Estate Plan

Have you completed your estate plan? If you began the estate planning process but did not finish it, or if you have discovered accounts or property that now need to be planned for, act now. Without an estate plan in place, the court will make all of your decisions for you. The court will decide:

● Who will receive your money and property at your death,
● How much each person will receive, and
● When each person will be entitled to receive the money and property (adults will likely receive their entire share right away).

Our Estate Planning Attorneys Can Guide You Through The Process

Our team of experienced attorneys is here to help you review your accounts and property to ensure that you and your loved ones are protected. Call Gunderson Law Group today to schedule a virtual or in-person consultation. We can discuss the types of accounts and property you own, what will happen to them when you pass away, and how you can leave a lasting legacy.

Personal Representative (Executor)

This trusted individual, appointed in your last will and testament, is responsible for collecting all your accounts and property, paying your outstanding debts, and distributing your money and property to your named heirs. This person’s task is to wind up your affairs, which can be time-consuming. If your chosen personal representative dies before you and there is no named backup, the probate court will use your state’s laws to determine who is next in line to serve as personal representative when you die.

Co-trustee Or Successor Trustee Of Your RLT

Serving either with you (co-trustee) or after you (successor trustee), this trusted person or entity is charged with managing, investing, and distributing the money and property from your RLT to you during your lifetime and to your chosen beneficiaries after your death. If your deceased loved one was a co-trustee, review your trust agreement to see what happens next. There may be a provision that either allows you to continue serving as sole trustee, names a specific person to step in and serve with you, or describes how to determine who your new co-trustee will be.

If you are currently the only trustee and your successor has died, nothing noticeable will happen with respect to how your trust is managed right now. If you die and there is no successor trustee, your beneficiaries will need to look to your trust agreement for guidance on how the vacancy can be filled. Your trust may provide that a certain number of your beneficiaries can appoint a new trustee without court involvement. Or your trust might require that the court approve any potential trustee. The outcome will depend on the trust’s wording and your state’s laws. Because the trust is revocable during your lifetime, while you are still able you can change any of these provisions to adapt to any changes that may arise.

Agent Under A Financial Power Of Attorney

Your agent is an individual you choose to carry out financial transactions (such as signing a check or opening a bank account) on your behalf. If the person you selected is deceased and there is no named backup, no one else has authority to act on your behalf. Depending on the reason you appointed the agent, this situation may not be of immediate concern. But if you become incapacitated, your loved ones will have to go to court and have someone legally selected to take care of your financial matters. Not only is this process time-consuming during a stressful time, it can be expensive and exposes to public view personal details of your condition and family dynamics.

Agent Under A Medical Power Of Attorney

Because this person will act only in the event you cannot make decisions or communicate your medical wishes, you may not feel an immediate need to revise your medical power of attorney. However, the unexpected can happen at any time, and this is one of the worst times when your loved ones must go to the probate court to have a guardian appointed to make medical decisions for you. This scenario has two drawbacks. First, the judge will look to state law in choosing the appropriate person, who may not be the person you would have chosen. Second, the selected person may not share your views about your medical care.

Guardian For Your Minor Child

If you are the only living parent or if the other legal parent is unfit to care for your minor child and your chosen guardian predeceases you, the probate court will look to state law to determine who is next in line to raise your child. As with other roles, the selected person may not be the one you would have chosen and, absent input from you, the judge may have limited information when making this critical decision.

Contact Professional Estate Planning Attorneys In Mesa

We understand that you are grieving the loss of a loved one. When you are ready, we are here to help you take the next step in your estate planning journey, whether you are starting, completing, or updating your estate plans. Give Gunderson Law Group, P.C. a call to schedule your in-person or virtual appointment, whichever works best for you.

Approved and published by Adam Gunderson