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THE ESTATE PLANNING DOCUMENTS ARE DRAFTED, NOW WHAT?

Oftentimes the actions which should be taken following the execution of estate planning documents are the most difficult for an individual to address.  When an individual engages an attorney to prepare estate planning documents on his or her behalf, such engagement does not necessarily include the assistance of the attorney in implementing the planning goals following the execution of the estate planning documents.  For example, an attorney may prepare a well-drafted and comprehensive inter vivos revocable trust on behalf of a client and recommend to his or her client that all assets be transferred into the inter vivos revocable trust.  However, unless the attorney guides his or her client regarding how to transfer title to the various assets, the client may be deterred from transferring title due to the effort involved with determining how to accomplish the transfer of assets, thereby defeating the benefits associated with the creation of the inter vivos revocable trust.

When seeking an attorney to prepare estate planning documents, an individual should take care to fully understand the terms of the contemplated engagement, and may wish to inquire whether the attorney is willing to provide guidance with regard to the asset transfer process.

TRANSFER OF ASSETS AS PART OF THE ESTATE PLANNING PROCESS

Below are several examples, but by no means an exhaustive list, of assets which should be addressed during estate planning.  However, since estate plans are individualized and unique, an individual should fully consider the implications associated with each contemplated asset transfer and beneficiary designation in order to determine what course of action will most fully accomplish his or her goals.

Residence

An individual should consider to whom he or she wishes his or her residence to pass at death.  An individual can designate in his or her Last Will and Testament (the "Will") one or more beneficiaries to whom the residence will pass at death.  However, in the event an inter vivos revocable trust was created (in addition to the Will), one may instead wish to transfer title to the residence to the inter vivos revocable trust.  Such a transfer would enable the individual to not only designate in the inter vivos revocable trust one or more beneficiaries to whom the residence should pass at death, but also take advantage of the various benefits associated with inter vivos revocable trusts, such as privacy and the avoidance of probate.  If title to a residence is transferred to an inter vivos revocable trust, then the transferor will need to contact his or her homeowner’s insurance agent (as well as the agent for any flood, personal property, or other insurance policy[ies] related to the residence or its contents) immediately upon effectuation of the transfer in order to request that (i) ownership of the insurance policy be transferred into the name of the inter vivos revocable trust and (ii) both the transferor and the inter vivos revocable trust be named as insured parties on the insurance policy.  An individual may wish to contact his or her homeowner’s insurance agent (as well as the agent for any flood, personal property, or other insurance policy[ies] related to the residence or its contents) in advance of the transfer of title in order to ensure the insurance company will be able to amend the insurance policy as needed in order to evidence the transfer of title.

Bank, Investment, and Retirement Accounts

With regard to bank accounts, such as checking, savings, and money market, as well as investment accounts, an individual should consider designating a payable on death beneficiary to whom the assets in each account will pass at death.  A married couple may wish to designate each other as the primary beneficiary of the account, and designate their children as the contingency beneficiaries of the account.  In the alternate, if the individual has formed an inter vivos revocable trust, then he or she may wish to designate the inter vivos revocable trust as the contingent beneficiary.  Whether designating one or more individuals or an inter vivos revocable trust, an individual should take the necessary steps to designate payable on death beneficiaries of each account in order to avoid the funds being subject to probate.

Similarly, an individual should consider designating a primary and contingent beneficiary of his or her retirement account (such as an Individual Retirement Account).  It should be noted that retirement accounts often contain default provisions which specify who will be treated as the beneficiary if no alternate designation is made.

Life Insurance Policies

With regard to all life insurance policies for which an individual is the insured and owner, he or she should consider designating a primary and contingent beneficiary to whom the insurance proceeds will be payable at death.

Certificates of Deposit

If an individual has formed an inter vivos revocable trust, then he or she should consider transferring title to certificates of deposit into the name of the inter vivos revocable trust.  However, prior to transferring title to a certificate of deposit, an individual should contact the issuing institution regarding the imposition of any transfer penalties.  In the event penalties will be assessed, one may wish to retitle the certificate of deposit upon its maturity.

Motor Vehicles

If an individual has formed an inter vivos revocable trust, then he or she should consider transferring title to his or her motor vehicle(s) into the name of the inter vivos revocable trust.  If title to a motor vehicle is transferred to an inter vivos revocable trust, then the transferor will need to contact his or her motor vehicle insurance agent immediately upon effectuation of the transfer in order to request that (i) ownership of the insurance policy be transferred into the name of the inter vivos revocable trust and (ii) both the transferor and the inter vivos revocable trust be named as insured parties on the insurance policy.  An individual may wish to contact his or her motor vehicle insurance agent in advance of the transfer of title in order to ensure the insurance company will be able to amend the insurance policy as needed in order to evidence the transfer of title.

© 2010 GANDERSON LAW, P.C.