Estate PlanninG

The Importance of Reviewing Your Accounts and Property When a Loved One Passes Away

When you create an estate plan, the main objective is usually to make sure that your accounts and property aren’t only in your name. If they are, they will be subject to probate when you die (a costly, public, and time-consuming court process). Therefore, if a loved one passes, it’s important to review your accounts and beneficiary choices to make sure that your estate plan isn’t compromised.

Accounts that have beneficiary designations (life insurance policies, retirement accounts, annuities, etc.) will be distributed at your death without going through probate. However, if you only named one beneficiary and that person dies before 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). These default rules may give the balance of the account or policy to your spouse, your heirs, or your estate (which would require probate for your remaining family members).

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’s important that you undertand which accounts have these types of beneficiary designation: if your pay-on-death or transfer-on-death beneficiary dies before you and you have no backup beneficiary, you need to update the designations or face the account being subject to probate.

You might have a case where, in hopes of avoiding probate, you added another person to an account or a property’s title so that it is owned jointly with rights of survivorship. This type of ownership means that when the first owner dies, the surviving owner automatically owns the entire account or property without going through probate. If you were relying on this method to avoid probate and your co-owner has died, you now oen the entire account or property individually. This means that, without further planning, 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 dies, you’re now the sole owner, and you need to consider other planning options for your property if you want to avoid probate.

If you have a revocable living trust as part of your estate plan, 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 revocable living trust. Review your accounts and property to make sure that your revocable living trust is, in fact, the owner of the accounts and property.

If you inherited accounts and property from your loved one who has passed, or you’ve recently discovered/acquired new accounts or property, you must address these 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’re able to name a beneficiary for the account, it’s a good idea to do this as soon as possible.

If you began the estate planning process but didn’t finish it, or if you’ve 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. These decisions include:

  • 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).

We can help 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. 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.

To schedule a consultation, call Santaella Legal Group, serving San Ramon, Danville, Dublin, Pleasanton, the Tri-Valley and Bay Area at (925) 831-4840.