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Q&A: How can I ensure my assets pass efficiently to my heirs? (Part 1)

Grandparents with grandkids / heir(s) taking a selfie outside

Protecting your assets and taking the necessary steps to provide a smooth transfer to your heir(s) is important. Oftentimes, certain steps are not properly addressed, and a person’s assets end up controlled by the courts. Fortunately, for most people, there are simple steps you can take to ensure your assets and personal belongings transfer in a private manner.

TAKE INVENTORY:

It is essential to document and review your personal holdings, including the titling and registration of your assets/financial accounts. In doing so, you can identify who is legally entitled to your assets. This may sound obvious, but it is surprising how often people will skip this process or miss filling in a critical detail on a form. Without proper documentation and registration, your loved ones can end up in a time-consuming and expensive battle with the court system. In addition to the headache this would cause, it can also create a rift between family members or heir(s). Taking the time to review and make any necessary updates will provide you peace of mind regarding the handling of your assets if you were to pass.

UPDATE BENEFICIARIES OR HEIR(S) AND YOUR LIVING WILL:

For qualified plans (such as your 401k, 403(b), profit sharing, and IRA accounts), you want to ensure you have named both primary and contingent beneficiaries, and update them as necessary. A newer feature for some individual accounts, is the ability to add a Designated Beneficiary Plan (DBP) or Transfer on Death (TOD) plan. Most brokerage firms and banks provide this feature at no additional cost. Another feature to look for is the “per stirpes” designation. With this option, if one of your named beneficiaries or heir(s) were to pass before you, the assets they would have received through your estate would be distributed to their living children in equal shares versus being split between other primary beneficiaries.

DO I NEED A TRUST?:

A trust, specifically a living trust, can be a valuable tool for both individuals and families. This is because it can help protect their assets and create an efficient distribution process in the event of their passing. A living trust would have specific distribution instructions for heirs while also providing the ability to maintain control of the assets throughout their life. However, with the proper designation of beneficiaries, you may not need to establish a trust. Your advisor can help explain the pros and cons of a trust in relation to your unique situation. They can also connect you with a qualified estate attorney if desired.

IN CONCLUSION:

We recommend reviewing and updating your estate plan every 2-3 years. This is in addition to when there are any significant changes in your or your family’s lives. If you have any questions or need assistance with Estate Planning, please reach out to one of our advisors.

To read part 2, click here

Author: Kevin Riley | Wealth Management Advisor
Written: April 15, 2021