Gregory S. DuPont
Titling Assets Properly
The first step in estate planning is to know who owns what so property passes in the manner you desire. When assets are not titled correctly, your property might not pass to your intended heirs. These neglected heirs can then feel wronged. Since others now own the property, legal action may be taken against those who allegedly mistitled the assets so it is critical to understand how your assets are titled.
Dividing Your Assets
When planning the division of your assets, you may endorse the philosophy of “share and share alike” to avoid conflicts and complaints of favoritism. But does the idea of fairness equate with factors such as age, talents/skills, interests, needs, and degrees of material success? A more practical approach to the division of assets may be one in which you recognize and compensate for differences in the abilities and needs of your heirs, even at the risk of some disagreement.
Through your estate plan, you have a chance to provide a measure of fairness that your heirs may not otherwise have found in their own lives. Consider speaking with your heirs about their hopes, dreams, and expectations, as well as their concerns and frustrations. By listening first, you may gain valuable insights into ways to divide your estate constructively without causing jealousy and resentment. The decisions may be difficult to make, but in the long run, your family will appreciate your goal of addressing each heir’s needs.
Joint Tenancy and Tenancy-in-Common
As Ohio is not in a community property state, where the disposition of assets falls under community property laws, the simplest and least expensive estate planning technique for married couples is to take title to assets as “joint tenants with rights of survivorship.” At the death of one joint owner, such titled property automatically passes to the survivor without having to go through probate. However, there are other forms of titling that may be appropriate depending on circumstances.
When two or more people own property, generally the options for titling are joint tenancy or tenancy-in-common. Joint tenancy means when one of the joint tenants dies, the other owner(s) takes control of the entire property. The deceased owner can pass none of it to anyone but the joint tenant(s). If a tenant-in-common owner dies, his fractional share of the property passes as his will or living trust directs.
For example, Clayton and Jane, a husband and wife, own stocks and bonds registered in joint tenancy. If Jane dies, Clayton owns the stocks and bonds entirely. Even if Jane's will gives her share of the stocks and bonds to her son Jack, Jack gets nothing. The will cannot transfer ownership of this type of property. On the other hand, if the stocks and bonds were registered in Clayton's and Jane's name as tenants-in-common, Jack would receive Jane's share of the assets.
Another titling problem is assets that pass by contracts, such as retirement benefits and insurance. If Jane names Clayton on her beneficiary designation form as the person to receive her retirement plan benefits, Clayton will receive the benefits. This is true even if Jane says in her will or her living trust that the benefits should pass to Jack.
Insurance contracts operate the same way. If Clayton is the named beneficiary, Clayton will receive the insurance proceeds at Jane's death. Even if her will gives the insurance to Jack, he does not receive any of it.
Property held in wills or living trusts passes to the people named in those respective documents. Wills only pass property that is in your name alone, including partial interests. Living trusts only pass property titled in the name of the trustee or given to the trustee at death by beneficiary designation or by will.
For example, if Jane's living trust says her personal property and residence go to Jack, but the property is in her name and Jane's will leaves all of her property to Clayton, it goes to Clayton.
If Jane dies without a will, the property passes according to state law. This means, according to the Ohio state law, that Clayton will inherit 100% of Jane’ property because Jack is his descendant.
Make sure to title your assets properly. The first step in estate planning is to know who owns what so property passes in the manner you desire.