Having more then one owner named on property or financial accounts generally enables a smooth transition upon the death of one owner. Estate planning experts share examples and advice about the usefulness of joint ownership and practical tips related to wills and beneficiary designations too.
According to Burns and Levinson, assets that are jointly owned do not usually need to go through the probate process: when one owner dies, the surviving owner(s) simply takes over. The convenience, speed and avoidance of extra stress during grief make joint ownership a reliable and convenient tool in estate planning:
Upon the death of one owner, the surviving owner automatically takes sole ownership of the asset. There is no formal process required to update the ownership. In most instances, it can be accomplished by presenting the death certificate to the proper institution.Owning accounts, property, or other assets jointly is common in most people’s lives. After marriage, spouses will add each other as joint owners, and often own their homes together. Owning assets jointly makes it easier for the surviving spouse to manage the property after their spouse’s death.
Joint ownership is useful in other relationships, not just for those legally married.
Joint ownership of assets can also be a helpful in families with aging elders, though it is important to carefully coordinate these arrangements so that they do not inadvertently cause confusion and conflict vis a vis intentions expressed in estate planning documents, like wills. Attorneys offer this guidance:
Elderly individuals, especially those who live alone, often add their children as joint owners of their accounts for assistance in paying the bills and managing their assets. When making this decision, they may not necessarily want the account to pass to that child at their death, but they add them as a joint owner for their convenience. Therefore, most people in this situation will include an “accounts for convenience” clause in their Wills. This provision provides that any accounts owned jointly at their death was “for convenience only” so that the funds will pass according to the terms of their Will rather than by joint ownership.
Executors and Executor Bonds Explained
A very important aspect of estate planning is the designation and preparation of a representative, typically referred to as an executor when a will is involved, to manage the affairs of the estate in accordance with the local probate court. Though the process differs a little bit in each state, generally, executors commence their duties by filing an original will, with the death certificate in probate court (which is referred to as surrogate court in some states). Executors are then given a letter of testamentary which allows them to officially begin taking actions on behalf of the estate. Because debts must be paid before assets can be distributed, it can take up to a year before beneficiaries receive assets designated for them. It’s helpful to know that many states have developed expedited probate processes, especially for modest estates. Unpaid taxes, debts, conflicts among family members or contested wills are examples of what can cause complexities and delays during probate.
Because executors have a fiduciary obligation to act in the best interests of the estate and beneficiaries, they must avoid conflicts of interest. That’s why probate courts sometimes request executors to obtain an executor or estate bond. Essentially, the bond guarantees that duties will be conducted in accordance with the law. Colonial Surety helps executors in any state quickly obtain their required bonds—and avoid further probate delays. At Colonial, the steps to obtaining executor and other bonds are quick and easy: get a quote online, fill out the information, and enter the payment method. Instantly print or e-file the bond right from anywhere—even probate court.
Good To Know—and Do
Like jointly owned assets, accounts with named beneficiaries also avoid the probate process: the assets in them go straight to the designated beneficiaries. Absent complications, this makes receipt of the assets fairly expedient too. Typically, assets like life insurance policies and retirement accounts encourage the designation of beneficiaries. It is a good idea to take these beneficiary designations seriously, provide the proper information, and keep them up to date vis a vis changes in the family and the overall estate plan. Burns and Levinson offer this related guidance:
Any asset that passes by beneficiary designation to a named beneficiary is considered a non-probate asset. However, suppose you pass away owning a life insurance policy or retirement account that requires a beneficiary, and you fail to name one. In that case, the funds will be considered a probate asset. The default beneficiary will be your estate, and the proceeds will pass under your Will, if any, and otherwise as determined by the law. Therefore, it is very important to keep the beneficiary designations on these policies and accounts updated.
You can also designate a “transfer on death” beneficiary for assets that do not typically have beneficiary designations. For example, any bank accounts held in your name alone can have a “transfer on death” beneficiary, preventing that asset from becoming a probate asset upon your death.
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