How is my property transferred at death?
This is probably the most common question that we get. The first one is you have a last will and testament. That last will and testament states exactly how your assets are going to be transferred from your estate.
Remember once you pass away all of your assets go into the estate bucket. Your last will and testament will say who gets what out of that bucket.
You might have three kids and each one gets a third. You might have three kids and want to also give something to a favorite Charities. The charity gets a fourth and your kids each get a four.
It's however you want it. It is your last will and testament.
Along with the last will and testament is a revocable living trust. You guys know, I really like a revocable living trust centered estate plan.
A revocable living trust will say exactly how to transfer the assets that are in the Trust bucket to your heirs.
The second way is beneficiary designations, You'll see these a lot on insurance policies and retirement accounts. Sometimes called pay on death designations on bank accounts.
That is a form that you fill out with your insurance company, retirement account, or your bank. It states if you pass away, you want your money to go to this person. It's a really simple way to transfer the assets that you have in Banks and retirement accounts to somebody directly.
It's a really easy way to transfer those assets without having to go through the probate process.
How does this work? The financial institution will usually require a death certificate and some type of affidavit proving you are who you say you are. They need rock solid proof of your identity.
Once the financial institution has satisfactorily identified you; and matched you to the person on the beneficiary designation, then they will write you a check.
Operation of Law
The third way to transfer property is by operation of Law. If you own a house with your spouse or your partner, you probably own that home that you're living in as “joint tenants with the right of survivorship”.
That means once one of you passes away the property automatically goes to whoever the Survivor is of the two of you.
The surviving person needs to file a simple form letting the world know who died.
Let's say it's a husband and wife, and the husband dies first. The wife is the survivor. By operation of law the property goes to her.
The property transfers automatically to her in most states. However, she still needs to file what's called an affidavit of surviving joint tenant.
This is a form that tells the world that you owned this property with your husband, as joint tenants with right of survivorship. That the husband has passed died first. And, pursuant to operation of law you're the surviving joint tenant.
You're now the sole owner of that house - that piece of real estate.
The fourth way to transfer property is by state law called “intestate succession”.
You did not have a last will and testament? Yu did not have a revocable living trust? You did not have any beneficiary designations? You did not have any property set up by operation of law?
Then we must look to the laws in your state, to the laws of intestate succession.
You probably won't like the way property is distributed under the laws of intestate succession. It's a very strict statutory way of Distributing your property.
We have witnessed where people lived together for years and years, but they were never legally married. They never legally formed a partnership. They had no estate planning whatsoever. In all those cases, the surviving partner lost out on the entire estate.
It happens repeatedly. Unfortunately, we see this all the time.
Always make sure you have an estate plan in place.
So that the assets that you've worked your entire life for are not distributed to somebody who you didn't want or maybe that you didn't even know.
Make certain that assets go to who YOU want.