Estate Planning Part 1: How assets pass at death.

How better to begin my blog than to discuss the basics of how assets pass at death?

The way assets pass at death can be swept into four categories:

  1. Survivorship.  Assets held as Joint Tenants with Rights of Survivorship (known as Tenancy by the Entirety when the property owners are husband and wife) pass to the survivor automatically. Common assets held as survivorship property include a home owned by spouses and bank accounts.
  2. Beneficiary Designation.  Assets with a beneficiary designation pass upon the death of the owner to the named beneficiary.  This includes life insurance, annuities, certificates of deposit, retirement accounts (IRAs, 401(k)’s, 403(b)’s, and etc.) and any number of other types of assets.  Sometimes beneficiary designations are called “TOD” or “POD.”
  3. Trust.  This is ripe for the next blog entry and I do not wish to steal my own thunder, but basically a trust is a vehicle for managing assets.  The Trustee is the “manager.”  The beneficiary is the person who gets the benefit of the trust assets.  Anyway, assets held in trust pass according to the terms of the trust.
  4. Sole name.  The fourth and final way that assets pass at death are assets that are in your sole name, without a beneficiary designation, and without a joint owner (no survivorship aspect).  These are the only assets that pass through probate and controlled by a Will.  One caveat: assets paid by beneficiary designation to your estate (or without a valid beneficiary designation) or your executor or to a trustee named in your Will will be controlled by your Will.

Did you notice that there are not that many types of assets that pass through your Will?

More to come.  Stay tuned.

Rob Malin

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