by Benjamin T. Branche

Consider this, at the time of your death your Will does not control who your property goes to when you die. This is a common occurrence when you fail to consider not all of your property passes pursuant to the terms of your Will. In many cases the Will only controls a small portion of your estate. The assets of your estate are broken down into three categories: joint property, contract property, and solely owned property.

Joint property is usually held as joint tenants with right of survivorship or tenants by the entireties, but such language is not required. Such property is not affected by the terms of your Will because it passes directly to the surviving joint holder.

Contract property includes trusts, IRAs, 401k’s, pensions, life insurance, and accounts with payable/transfer on death designations. Such property does not pass according to the terms of your Will because the beneficiary of such asset has been appointed pursuant to the terms of a trust document or a beneficiary designation form.

Solely owned property, is the only category of assets distributed pursuant to the terms of your Will. This is property that is in your name alone and does not have a beneficiary designation.

The category of property is an important consideration when you do your estate planning as such designations/ownership will override the terms of your Will and may result in trusts for taxes, children or disabled beneficiaries not being funded. Therefore such beneficiary may receive an asset before the intended age or at a time he/she is disabled.

Many Wills also include a tax clause that requires death taxes be paid out of the residue of the estate without taking into consideration that the beneficiary under the Will may be different from the beneficiary of contract or joint property. Such clause will result in the Will beneficiary paying taxes for unrelated individuals or his or her siblings who received the contract or joint property.

Most importantly, many family disputes arise over the implication of the Multi-Party Deposit Account Act, which creates a presumption that assets in an account with co-owner pass to the surviving owner. It is not uncommon to hear that someone “put” his/her child on his/her checking and savings account. The impact of doing this could be substantial because the parties must now determine if the intent was so the co-owner receive the asset or so they could assist in paying bills. Many families spend a significant part of the estate in legal fees trying to determine the intent.

Keeping the above in mind, remember that when you do your estate planning it does not end with the execution of your Will. It is important to complete your planning by ensuring you have the correct beneficiaries named and your accounts are titled correctly. If careful planning is done, the problems discussed herein can be avoided.

Benjamin T. Branche, Esq. is an attorney at the law firm of Szaferman, Lakind, 101 Grovers Mill Road, Lawrenceville, NJ, 08648. He concentrates in tax, trusts, and estates, and business law. He can be reached at bbranche@szaferman.com or 609-275-0400.

Facebook Comments