It’s all in the details: property titles and beneficiary designations

Property titles and beneficiary designations are an important part of an estate plan. Make sure they are current and coordinated with your planning documents. As part of the estate planning process, I ask clients for a list of their assets and how those assets are titled. The title to assets can determine who gets the property when the owner dies. Property that is owned by two or more people with joint rights of survivorship or by husband and wife will pass automatically at the death of one owner to the surviving owner. When real property is held by two or more people as tenants in common, each is considered to own a separate share of the property and to be able to dispose of that share in his or her Will. 

As an example of why this is important, consider the following. A husband and wife were sure that they owned their home jointly. However, after the husband’s death, it was discovered that the deed to the property stated their names but failed to describe them as husband and wife. As a result, they owned the property as tenants in common without rights of survivorship. This meant that the property did not automatically pass to the wife at the husband’s death. Instead the Will had to be probated to show that the husband’s share of the property passed to the wife under his Will.

Beneficiary designations on life insurance and retirement plans should be checked as part of the estate planning process also. As an example of why, consider the following. A man named his wife as beneficiary of a group life insurance policy that he had through work. His wife died, and he never changed the beneficiary designation on the policy. Decades later, after a second marriage, the husband died, and the family discovered the life insurance policy that still named the first wife as beneficiary. The insurance company decided that the second wife was entitled to take the policy proceeds, much to the dismay of the children from the first marriage.

Property titles and beneficiary designations are an important part of an estate plan. Make sure they are current and coordinated with your planning documents.

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