Accidental estate planning

If you were asked, “When was the last time you did any estate planning?” your answer may be, “Several years.” This is obviously going back to the last time your Will or trust was updated and signed. However, it is very possible some estate planning has been done without your knowledge. This is possible since every time an account is opened, one or more estate planning decisions are being made.

You might ask “What estate planning is being done?” To best answer this, an explanation of estate planning might be in order. Whether it is an attorney or a financial planner talking, estate planning generally is the preparation of the needed legal documents while living to assist in the process of transferring the ownership of assets to the owner’s heirs when a death occurs. The documents include the traditional Will, but also include trust documents and others.

Once a death occurs, this is when the legal transfer process starts, and it is known as probate. The court system uses the probate process and the Will to transfer the ownership of the decedent’s assets to the heirs named in the Will. But, this process only addresses assets that are subject to the terms of the Will.

This is where individuals often make estate planning decisions without knowing these decisions are being made. Each time a beneficiary statement is changed or a new checking or investment account is opened, an estate planning decision is made. When the account officer asks how the account should be titled, this may impact an estate plan. If the account is titled in joint name and with the provision “with rights of survivorship” (WROS), then the account may no longer be subject to the terms of the Will. Even when the Will specifically names the account and how it should be disbursed upon death, the use of joint registration with “WROS” takes precedence and acts like a contract. The new owner of the account will be the joint owner(s) and disregard the terms within the Will. The same is true of any account or policy subject to a beneficiary statement. Thus, the beneficiary statement is a critical step in the estate planning process. When an account or policy is not titled properly to work in conjunction with a Will, trust, or other estate planning tools, perhaps due to the advice of the new account officer or investment manager, problems and unnecessary expense could occur when it is time to transfer the assets to the new owners. Additionally, when account registrations and beneficiary statements are not reviewed and updated in conjunction with new estate planning documents, the newly defined wishes of the owner of the assets may not happen due to the account registrations and beneficiary statements being out of date.

Few people enjoy thinking about their estate plan and whether it is up to date or not. Clearly, it is not a fun topic to think about or work upon. But, not taking the time to make sure all aspects are correct and current could create significant problems at a time when few remedies may exist.

It may be time to review all of the documents making sure they still clearly state current desires and that all assets to be controlled by the documents are setup properly so the plan will work. Estate planning can be a very complex area of the law. It is my opinion, the benefits of working with a qualified estate planning attorney is well worth the cost and may provide many benefits beyond just preparing documents.

For help with managing investments contact me at Quality Financial Concepts or one of the other Certified Financial Planners in our area. To continue a personal quest for education, you can also view our website, There you will find articles on a variety of topics, on-line seminars, calculators, as well as a host of other tools all available for free.

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