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Stock Split Offs If you own publicly traded stocks, be mindful of stock splits and spin-offs, which can create additional shares or shares in new companies that may be issued in your name instead of your trust name. Transfer these to your trust or title them jointly with your spouse and then to your trust when you both pass away. Stock in Insurance Companies That Demutualized Some life insurance companies do not have shareholders. Instead, the policy owners own the company. These are called mutual insurance companies. In the past 20–30 years, some of those companies have “demutualized,” which means they issued stock to their policyholders. Because insurance policies are usually personally owned, the stock is issued to the policyholders personally and not to their trust. This is one of the most frequent probate assets we have seen. These stocks, or the accounts they are directly registered in, can be changed to trust title.
Savings Bonds Savings bonds can accumulate significant value over time — that is why it is essential not to forget them in your estate planning process. The rules are complicated; generally, you can add a co-owner with rights of survivorship or name your trust as current owner. Visit the Treasury Department website for forms and instructions. Inherited IRAs Inherited IRAs must be withdrawn on a certain timetable established by federal law. That topic is too detailed to be covered in this article, but we want you to be aware that there are Minimum Required Distribution rules. Also, many people forget to name beneficiaries to receive inherited IRAs at their deaths. Changing Financial Advisor or Advisory Firm We have seen estates that required probate because when the client changed their financial advisor or moved from
one custodian to another, the new accounts were not titled to their trust. Or beneficiary designations were not set up properly. Check your accounts if you have made these changes. Remember: A comprehensive estate plan goes beyond the obvious assets and includes everything of value, no matter how insignificant! What you do or forget to do after you make your estate plan can cause your planning to fail! Give us a call today if you are not sure all your assets, both financial and real estate, are properly titled and beneficiary designations properly set up. We will schedule a free Trust Review and send you a list of what paperwork to bring with you so we can check things out for you. We’ve got your back!
Transfer Trouble LIMITATIONS AND RISKS OF TRANSFER ON DEATH DEEDS
Many once-complicated processes have become simplified in the modern age of convenience, such as booking a hotel room online. It can be tempting to try to simplify other parts of our lives with a couple of clicks on a computer. However, when it comes to estate planning, simple does not always mean better. An example of this is the Transfer on Death Deed or TODD. TODDs allow you to name a beneficiary who will receive your property upon your passing. While this seems like an elegant and hassle-free way to establish your inheritance, it has significant downsides and potential pitfalls. Joint Ownership One of the greatest points of contention around TODDs involves joint ownership. If you are a joint owner of a property, the other joint owner will inherit sole ownership upon your death — regardless of whether there is a TODD on record. This
is an especially important issue for married couples, who often share joint ownership of a property, such as a home; this joint ownership will supersede the TODD, even if the intended beneficiary is someone other than your spouse. Disinheriting by Mistake If a will and TODD contain conflicting information regarding property
inheritance, it can cause significant problems for your beneficiaries. Existing TODDs can also resurface and derail other estate plan documents representing the deceased’s most recent and accurate wishes. Because of this, it is important to revoke TODDs before completing new estate plan agreements. Potentially Costly With TODDs, there is no warranty of title, which means a property owner’s debts may be passed on to their beneficiary along with the property. In effect, your beneficiary may be liable for your financial obligations, which can cause undue economic hardship. Another shortcoming with TODDs is that, unlike wills, they cannot be amended and must be revoked. If you want to rework a TODD, you must incur the costs of drafting one entirely from scratch, making the money you spent on your previous TODD meaningless.
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