For those starting on the road to estate planning, you’ll need an estate planning checklist. The first item on the list is a listing of all your assets. You need to identify the type of ownership for estate planning of all the assets on the list. For married couples, for instance, you can own property in joint tenancy with rights of survivorship (JTWROS). Here, the joint owner receives the property when you pass. Most married people own their homes and other large items together this way. Another type of joint ownership for married couples is tenancy by the entirety. Not all states allow this type of ownership. The final type of joint ownership is tenancy in common where each person owns a specific percentage of the property and can sell their percentage. A married couple might use this form if one person owned a greater interest in a particular property. Holding property in some kind of joint tenancy between married couples is acceptable estate planning in many cases, but is almost never acceptable in other cases. Good estate planning tells us that parents should almost never hold property as joint tenant with a son or daughter because that son or daughter’s asset protection problems (e.g. a divorce or lawsuit) can come back to haunt the parent. A divorcing son in law may claim that the joint tenancy property with the daughter is really part of the marital estate, or a litigant may make a claim on the parent’s assets.
Of course, for all property, you need to keep track of the owner and all beneficiaries of each property in your estate planning. List all the life insurance policies, for example, on your life or those you own. You also need to list the beneficiary of the policies for your estate planning checklist, the cash value, face value and ownership of each policy. (Since life insurance owned by you will become a part of your estate, life insurance can end up becoming estate taxed). List all other assets you own such as real property, automobiles, personal property, antiques, bank products such as checking accounts, CDs or savings accounts, brokerage accounts and other liquid assets. Again, if a joint owner is your child or a person other than your spouse, review first with an attorney about removing that person off the account, for the estate planning related reasons stated above. (It is important to consult an attorney due to tax and other legal considerations before doing the removal). Last, you can use a POD designation for bank products, meaning payable upon death or TOD for investment accounts, meaning transfer upon death, to transfer assets at death. For smaller estates, this could be a useful way to transfer your property at death, but does not provide asset protection for your beneficiaries and in some cases you can end up disinheriting certain relatives such as grandchildren (click here for immediate free estate planning consultation). One advantage, however, to PODs and TODs is that there is no ownership to the beneficiary until you die, so a child’s divorce or other asset protection problems cannot make a claim on your assets. You can also change the designation at any time. This is a good estate planning technique. The benefit of using these designations is that the asset doesn’t pass through your estate, meaning it doesn’t go through probate and releases immediately to the POD or TOD. Don’t forget to list the name of the institution that holds the asset and the account number.