In California, there is a basic body of legal instruments that the estate planning attorney will recommend. While the estate plan of a married couple contains several recognized documents, such as wills, powers of attorney, trusts and health care directives, one’s estate planning tasks are not yet completed. The couple must do a final search of all assets to determine how they are titled.
They must also check all of the beneficiary designations in life insurance and retirement accounts. IRAs, 401(k)s, and 403(b)s must have beneficiary designations in order to take advantage of all of the benefits attributed to these funds. With life insurance, prior beneficiaries who have since died must be replaced by a current choice. In addition, vigilance is recommended to assure that a former spouse from a dissolved marriage does not still appear as the current beneficiary. All policies and accounts with beneficiary designations must be checked to update the appointments.
It is important to remember that, when there is no beneficiary or where the designated person has died, the proceeds will go through probate, which will incur additional fees and time delays in processing the funds. Remember also that one’s will covers only probate assets. Life insurance proceeds, investment accounts and retirement accounts do not pass through the will and do not ordinarily go through probate. They pass to the beneficiary listed on the policy or account. Review other financial assets to make sure that they are titled correctly.
For example, all jointly titled property will pass to the joint title holder in full-fee simple title after the death of a joint owner. This principle applies to transfer-on-death and payable-on-death accounts. In fact, studies report that more than half of all assets in this country pass not by wills but by beneficiary designations, joint titling and trusts. Estate planning in California gets even more complicated when there has been a divorce and remarriage; if this is the case, it is recommended that one consult with an estate planning attorney to assure that assets are being distributed in the desired manner and to the right people.