Golden Opportunities

A football team doesn’t head home at half-time – (though maybe some of the fans do!) That’s because they know the game’s not over! Yet when folks enter the arena of estate planning, many of us will drop the ball and fall short of our goals. Why? Because our planning was incomplete. This could put your loved ones on the losing side. Bob Dlugosz and Lou LaJoe are here with a winning game plan for registering assets. Bob and Lou are Vice Presidents and Client Advisors, both with First Merit.

Question:Bob, we've huddled with our advisors to create an estate plan. What plays should be called?

Answer: The first play is one many folks already do – execute the right estate planning documents. But to cross the end zone, you need to make sure your asset registration meshes with the planning documents. If you don’t, it may cause your assets:

1. To go to individuals different than those you want to receive it
2. To have a needless estate tax issue
3. Or send assets through probate when probate could have been avoided.

Question:Lou, now I'm putting you in the game. Can you give me an example of what we're talking about?

Answer: Sure, let’s say your will leaves all assets to your two kids equally. However, you have a large brokerage account or CD that is joint or POD with your son Johnny. The designation to Johnny could have been set up years ago and you may have forgotten about the POD designation, but it is there, will not go away, and will not be overridden by your estate plan. Johnny will get all of the CD or the brokerage account and the rest of your assets will be split between your two kids, despite your wishes.

Question:So the titles on assets win out over your will or trust?

Answer: Yes.

Question:Lots of folks are making Revocable Living Trusts. Do titling problems sack our plans here?

Answer: Yes. You may spend lots of money to avoid probate and cut death taxes using trusts. But, if you don’t title your assets into the trust, you’ll end up excluding the trust benefits.

Question:If we're married, any problem with leaving everything to the spouse?

Answer: You still have to be careful. Many times a husband and wife establish wills and trusts in their estate plan as a means of reducing or eliminating estate taxes. But, if they left all of their assets to each other under a joint and survivor registration, then the survivor receives all of the assets outright. They won’t go into the trust. All that trust work went to waste.
The unintended consequence is that the estate plan can be completely thwarted. The Trust owned by the first spouse to pass away may never receive assets because they weren’t transferred properly and the tax savings strategy is defeated, while the surviving spouse still ends up with all of the assets in their name, on the survivor’s death needless taxes may be paid!

Question:Bob, we hate paying unnecessary taxes - and we love avoiding probate. You mentioned earlier that registration could help avoid probate in some cases. Can you complete that play for us?

Answer: Registration will only avoid probate if:

1. the asset is POD,
2. Joint with right of survivorship,
3. or if the asset is held in Trust or is contractual in nature, such as an insurance policy.

We’ve scored some great information today, thanks to BOB and LOU’s wise coaching. Maybe the Browns will make an offer? To create your own winning playbook, give First Merit a call. The number’s next.