Many people believe that when they start estate planning, all their assets will be included in their will, their trusts, and other estate planning vehicles. However, for the majority of families, more assets are transferred outside of the will and testament than within. Some of these assets include jointly titled real estate assets, investment accounts, life insurance proceeds, etc. In many cases, the amount of these assets totals more than the probate asset.
In addition to these assets, most retirement accounts, such as 401(k)s, 403(b)s, and IRAs, have a beneficiary attached to them instead of being named in the will. Any investment or bank account with a designated Payable on Death (POD) or Transfer on Death (TOD) will not undergo the probate process. Any property held in a trust will not go through the probate process either.
Why should you be aware of the assets not included in your estate during the estate planning process? When you create your estate plan, your heirs may believe that the value of your estate is more than it really is. Once you factor in retirement accounts and other investments with listed beneficiaries, your total net worth may be more than your estate plan indicates.
If, for example, your children expect to receive a certain percentage of your estate after you die, they may end up getting less than they think if you do not include them as beneficiaries on your different accounts. This can lead to disputes and confusion after your death and even legal disputes depending on the situation.
If you have any questions about estate planning and how to ensure your assets get distributed according to your wishes, reach out to our legal office today.