This is the second part of a previous article relating to problems with second marriages and the transfer of assets at death. Here is a partial list of assets and the potential problems when titling is not updated.
No written agreement.
Most couples made a handshake and a kiss and promise to see that the other’s children would get everything that belongs to them. They are probably telling the truth but they have no idea of the results that can occur without planning. The following is a partial list of the titling of assets and the adverse results without proper planning.
Joint and survivorship account, transfer on death accounts.
The titling of accounts is crucial to proper planning. These accounts will go as set forth on the signature card. Many times an account created for the convenience of the spouse or the child will be transferred automatically to the other surviving spouse or child of the deceased. Large accounts can end in the wrong hands with the check of the box on the signature card.
It is imperative to know who the named beneficiary is. If not updated upon the death of the primary beneficiary, the wrong person may receive the funds. Live insurance is a great planning tool but neglect as to who is the proper primary and contingent beneficiary can have bad consequences.
IRA, 401 K and other like accounts.
These accounts all have designated beneficiaries. Many individuals forget to update or make an informed decision as to who is second in line if the first designated beneficiary should predecease the owner. This type of account is also a great tool in planning but one must know who will inherit.
Improper titling of real estate can have disastrous consequences. People think their real estate is titled one way only to find out it’s not. Remember that a property titled as joint and survivorship will go to the survivor. It does no good to place who gets the real estate in your will if you have already titled it as joint and survivorship. On the other hand, real estate passing under a will to the children can be subject to the probate statutory rights of the new surviving spouse. The children may be forced to buy back their parent’s property.
A simple asset such as an automobile can go to the wrong person. A man had a 1929 Ford that was supposed to go to his son. He didn’t provide for that in writing. At his death, the surviving spouse is allowed, by law, two motor vehicles automatically. Of course the son of the second wife convinced his mother that her husband must have wanted him to have the antique car and she elected to take title to the car as provided by law. She has since passed away and the car looks great in HER son’s garage. If dad had titled that car in his name,” transfer on death” to his son, it would be in his son’s garage today.
Placing names on accounts can avoid probate but the account can go to the wrong person. Careful planning should be done to insure that the right beneficiaries are in place upon the second to die. A review upon the first death should be completed to insure the desired result.