1st Dec 2013

Estate planning not only ensures that your assets are distributed to your loved ones at your death as efficiently as possible and in accordance with your wishes, but also presents a great opportunity for organizing your assets during your life.  By doing so, you can ensure that your assets are protected to the maximum extent, they will not have to go through probate after your death, your beneficiary designations are current and all of your assets are accounted for estate tax purposes.

The end of the year is an ideal time to get organized.  If you do not have an estate plan in place, contact an estate planning specialist to begin the process.  If you have completed your estate planning documentation, it is important to update the titles and beneficiary designations on your assets to ensure that your assets will pass in accordance with your wishes.  An incorrect title or beneficiary designation will circumvent the provisions of your Will or Revocable Living Trust, severely limiting their effectiveness.

Creating a list of your assets with asset-specific information is a great way to confirm that your estate planning is complete.  Below, you will find a brief discussion of each type of asset and the recommended information that should be listed on a comprehensive asset list.

Estate Planning

If you have your estate planning documents in place, it is important to review them any time there is a significant change in your family or financial situation.1  If there has been a birth, death or divorce in your family or if the value of your estate has changed, it is important to ensure that your distribution plan continues to meet your goals.  For example, the amounts or recipients of gifts you have chosen to leave may change.  Also, if your documents were prepared when your children were minors and they are now adults and perhaps even have children of their own, your documents should be revisited.  Additionally, tax laws are frequently changing and may result in significant tax liabilities if your estate planning documents are not up-to-date.

On your list: include which documents you have had prepared, date of execution, who prepared the documents and where the originals are located.

Real Estate

People often assume that their home is titled a certain way or that because both members of a couple are on the mortgage, the home is owned jointly.  It is important to check the deed and confirm that your home is titled the way that will be most beneficial for you.  There are many factors that must be considered when choosing a method of title, such as marital status, use of property, asset protection and survivorship.

In Illinois, there are three forms of joint ownership, each of which provides unique benefits and results in terms of passing the property.  It is important to work with someone who can explain them to you before a choice is made.

Additionally, if the real estate is a rental property, you should strongly consider the potential liabilities of owning such a property in your own name, as opposed to owning it through a corporate entity.  There are many options available for owning rental property that can protect your personal assets from any liabilities that are incurred as a result of the rental business.

On your list: include the address of the property, Property Identification Number (PIN), exact title on the deed and name of the lender if there is a mortgage.

Savings and Brokerage Accounts

Savings and brokerage accounts can be titled individually, jointly or to your Revocable Living Trust.  Your choice of title will depend on how you would like the account to pass at your death.  Some savings and brokerage accounts also allow you to add a beneficiary to whom the account will pass at your death.  Designating a beneficiary can have significant consequences, so it is important to discuss the proper title and designation with your estate planning attorney.

On your list: include the name of the bank, account number, whether there are any joint owners or beneficiaries designated and an approximate account value.

Retirement Accounts

While a retirement account, such as an IRA, 401(k) or 403(b), cannot be owned jointly or by your Revocable Living Trust, a beneficiary designation is typically required when opening the account.  However, if your designated beneficiary is not living at the time of your death, then the account will have to pass through probate.  With proper planning and advice, this can be avoided.  Additionally, failing to update beneficiary designations after a major life changes can result in large, unintended gifts at your death.2  With retirement accounts, it is also important to consider the tax benefits and consequences of naming certain individuals as they vary based on the age of the owner, beneficiary and the relationship between the two.3

On your list: include the name of the bank, account number, whether the account is a Roth or traditional account, designated beneficiaries and an approximate account value.

Life Insurance

Similar to retirement accounts, a beneficiary designation is typically required on a life insurance policy when the policy is purchased.  However, if your designated beneficiary is not living at the time of your death, the death benefit will have to pass through probate in order to reach the beneficiaries of your estate.  Again, this can be avoided with proper planning and an updated beneficiary designation.

On your list: include the name of the insurance provider, policy number, type of policy, death benefit amount and designated beneficiaries.

Business Interests

Ownership in a business is often forgotten when funding a Revocable Living Trust.  Like other assets, if a business interest is not owned in trust, it will have to pass through probate in order to reach your beneficiaries.  When a business interest is re-titled to your trust, the change in title should be reflected in the corporate books and on future tax returns.

On your list: include the current ownership, name of the corporation, the state of incorporation and entity type, the contact information for the manager of the entity and the approximate value of your ownership interest.  For closely held businesses, it is also important to know whether there is a buy-sell agreement in place.

Other Assets

Other assets that have title certificates and significant value, such as collectible vehicles, artwork or jewelry, can be re-titled in order to avoid the probate process.  Unless otherwise designated, such assets would typically pass in accordance with the personal property clause in your Will or Revocable Living Trust.

On your list: include the current ownership, a description of the property, any identification numbers, appraised value and where the original certificate of title is located.

Conclusion

Whether you intend to use a spreadsheet or pen and paper, an updated list of assets is an important part of your estate planning documents.  In addition to helping your beneficiaries locate and transfer your assets after death, it can help you organize your assets and discuss them with your estate planning attorney to ensure that your estate is administered in accordance with your wishes.


1. Please see “Reviewing Your Existing Estate Planning Documents” in the October 2010 Newsletter.

2. Please see the October 2013 Newsletter, How to Accidentally Leave a Gift to Your Ex-Spouse.

3. Please see the April 2011 Newsletter, Naming the Right Beneficiary for Your IRA, and the June 2013 Newsletter, The Right Way to Inherit an IRA.

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