A radio listener of mine recently called to share an estate planning snafu that she experienced with her late father’s estate. Prior to her father’s death she had “put her name” on all of his accounts to avoid probate. However, she recently learned that her father’s broker had opened an additional account for him that must now be probated because it was held in her father’s name individually. She was upset that the broker failed to advise her father about proper estate planning techniques.
I explained to her that most stock and bond brokers are not estate planning lawyers and their primary function is to provide investment advice — not estate planning tips. Additionally, most estate planning attorneys are not investment advisors and they generally don’t provide investment advice, nor do they provide ongoing advice about how to title assets acquired in the future. I frequently meet with clients who have excellent estate planning documents but because their assets are improperly titled, they were not going to be disposed of as intended.
Even if you create a trust, you must diligently make sure that all of the assets are put in the trust if you want the assets controlled by the terms of the trust. For instance, many married couples own accounts or property in joint names. At the death of the first spouse, the jointly owned property will automatically transfer into the name of the survivor regardless of what the will or trust provides.
Other assets like life insurance, annuities and retirement accounts will be distributed pursuant to their beneficiary designation regardless of the terms of one’s trust. Therefore, it’s critical to properly title all assets and make the appropriate beneficiary designations to make sure one’s estate plan winds up functioning as intended. An experienced Certified Financial Planner will generally be able to give valuable advice about how to properly title one’s assets in a way that will be consistent with his or her client’s wishes.
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