Research is periodically conducted to gain an understanding of the estate planning preparedness of American adults, and the results indicate that most of us have not executed all of the appropriate estate planning documents.
Why are a majority of people completely unprepared for something that is definitely going to happen? The truth is that there are those who don’t understand the importance of estate planning
Are they right? Is estate planning unimportant? Let’s examine the facts.
The Condition of Intestacy
Dying without an estate plan is called the condition of intestacy. Under these circumstances, certain types of property transfers would organically take place. However, this does not mean that estate planning is not necessary.
Joint tenancy is one example. A joint tenant is a co-owner of property. If you own property, you can add a joint tenant, and this person would become a co-owner of the property.
Through right of survivorship, the surviving joint tenant would assume ownership of the entirety of the property after the passing of one joint tenant. This transfer would take place outside of the probate process.
Probate is a time-consuming legal process, and it can also be expensive.
Joint tenancy can sound like a perfectly suitable arrangement, but there are a number of potential pitfalls. For one, if you add one joint tenant, you cannot spread the value of the property among multiple different family members.
For another, the portion of the property that is owned by the joint tenant could be in play while you are still living if the joint tenant was to run into legal or financial problems.
Another organic transfer that would take place outside of probate is the distribution of insurance policy proceeds. However, you could place the policies into an irrevocable life insurance trust when you are planning your estate, and this could provide added flexibility.
Payable on death accounts can be opened at banks and brokerages. With this type of account, you name a beneficiary. The beneficiary would inherit the assets in the account after you die, and the probate process would not be a factor.
A payable on death account is not a sound estate planning solution, because there are severe limitations that go along with payable on death accounts. A true estate plan would allow you to take more comprehensive steps to provide for each and every one of your family members in the ideal manner.
If you die intestate with assets still in your sole, direct personal possession, the probate court would step in to determine the way that the property would be distributed after final debts are paid. In the end, people that you love could be disinherited. This is reason enough to put an estate plan in place.
The Time Is Now
If you are going through life without an estate plan, you are ignoring one of the core responsibilities of adulthood.
If you don’t know where to begin, our firm can help. We offer free consultations, and you can visit this page to send us a message requesting an appointment: Essex Junction VT Estate Planning Attorneys.