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Asset Transfers to Beneficiaries without A Will or Trust

Weber Law Dec. 11, 2014

Virtually all adults will benefit from an estate plan that expresses an individual’s intention regarding the transfer of assets to heirs and beneficiaries when an individual passes away.  However, there are certain types of assets that can transfer without the need for an estate planning instrument like a will or living trust.  While some people with relatively small estates that are limited to these types of assets might be able to build an estate plan on these strategies, this approach must be used with caution by those with more extensive assets.

This strategy only applies to limited types of assets like insurance policies, bank accounts, homes, motor vehicles and other assets that include a beneficiary designation or titled ownership, such as:

Asset Transfers by a Decedent without a Will or Trust

Savings and Checking Accounts: When you open a bank account like a savings or checking account, the account can be held jointly or include a designated beneficiary.  If the account is held jointly, the account will transfer to the joint owner if you pass away.  Similarly, a beneficiary designated on a savings account will assume ownership of the account upon death of the owner of the account.

Real Estate: If you own land or real estate, you can facilitate the transfer of these properties through the form of ownership on title.  For example, joint ownership as husband and wife can facilitate transfer of your home to a spouse upon your death.  A similar strategy can be used to transfer a home to an adult child by holding title as “joint tenants”.

Life Insurance Policies: When you purchase life insurance, you will be asked to designate one or more beneficiaries.  The proceeds of the policy are paid to the designated beneficiaries upon death.

Motor Vehicles: Like bank accounts, motor vehicles can be held jointly, so the surviving owner takes title of the vehicle upon the passing of a co-owner.

Complications Necessitate Legal Advice

While the assets discussed above can be transferred outside of probate or a trust, there are issues that can complicate such transfers that make it prudent to seek competent legal advice from an experienced Wichita estate planning law firm.  There are a range of complications that might affect the prudence of using the strategies above for succession of your legacy, such as:

Marital Property Law: While joint tenancy and beneficiary designation can provide a potentially efficient asset transfer strategy, marital property law protects spouses from certain forms of disinheritance.  While the law will differ based on whether you reside in an “equitable property” or “community property” jurisdiction, marital property law may require that a spouse be listed as a beneficiary on a life insurance policy.  Similarly, a spouse will have an interest in other marital assets acquired during the marriage.

Unintended Tax Consequences: Even if you are single, you might not want to use the form of title or beneficiary designation as your approach to passing certain assets.  An adult child who functions as a caretaker for an elderly parent, for example, frequently is added to a bank account simply to facilitate access to funds for the care or the parent.  However, state and/or federal tax entities might attempt to characterize the funds as income to the adult child when the parent passes away.  It generally is advisable to use a will and/or trust because intestate succession law applies if you do not have either of these estate planning tools.  This means that the state will determine how some assets pass which might not be consistent with your wishes.

If you have questions about the best approach to passing specific assets to your beneficiaries, you should talk to an experienced Kansas estate planning lawyer.  Because every situation is unique, we invite you to contact us if you have specific questions.  We invite you to call us or submit an inquiry form through this website to schedule your initial consultation.