What types of assets are distributed by your Will?
A major focus of estate planning is to ensure that there's a coordinated, coherent, and unified distribution of your assets. That is, you should have a relatively clear idea of who gets what after you pass away.
Many times people confuse exactly which assets get distributed in accordance with their Will. For example, if Bill created a Will where he says he leaves everything to Jessica, Bill may believe that Jessica will get all of his assets when he passes away. However, some assets are not controlled by the Will (i.e., nonprobate assets), and to the extent that Bill has those types of property, extra steps need to be taken to ensure that they go to the appropriate people.
Here's a rundown of some of these types of assets:
- Joint Tenancy Assets - Any asset held as "joint tenants" or "joint tenants with right of survivorship" with others will automatically pass to the surviving joint tenants upon death.
- Community Property With Right of Survivorship - In California, married couples may hold some assets as "community property with right of survivorship". This operates similar to joint tenancy in terms of having property pass to the survivor.
- Revocable Transfer on Death Deed - This is a special type of deed, which allows real property to be transferred automatically to designated beneficiaries upon the owner's death.
- Pay-on-Death Accounts - Some types of bank accounts allow you to name a beneficiary to receive the account after the owner passes away.
- Life Insurance - The proceeds from life insurance are payable to the beneficiaries that the policy owner(s) have named.
- Retirement Accounts - Similar to life insurance policies, retirement accounts get paid to the beneficiaries that the owner(s) have named.
It's easy to lose track of all of these assets, especially if for example, you've switched jobs a number of times and have multiple 401k accounts with various employers. However, to have a clear and unified estate plan, it's important to have a thorough understanding of who will receive each of your assets at the time of your death, since the Will controls the disposition of only certain types of property.