People sometimes think they do not have an estate and have no need to do estate planning with an attorney. One definition of an estate is a large piece of land owned by one family. However, another definition of estate is all the money and property owned by a person, especially at death. When we start to discuss what property people own, they are surprised to learn what is included in their estate. The first conversation when meeting with a prospective client is to review the assets they own and how they are titled. Titling of assets must be discussed prior to drafting any legal documents.
What assets are included in your estate?
Real estate usually comes to mind first. The title of the real estate is determined by looking at the deed, not the deed of trust. The deed of trust is the mortgage and does not always reflect who owns the real property. The deed describes the Grantee or the buyer of the property. If you are married, the property may be held as tenants by the entirety, which is a unique ownership for spouses only. If you own property with another person who is not your spouse, then the real estate will be titled either as joint tenants with right of survivorship or tenants in common. If the deed is “silent” and does not specify the words joint tenants, then the real property is held as tenants in common. This is important to determine because tenants in common ownership passes according to your Last Will and Testament or through the intestacy statute if you did not write a Will. Joint tenancy automatically passes to the other person named in the deed. We also need to value the contents of the home as part of your estate.
Cash accounts such as checking, savings, certificates of deposit, and money market accounts are included in your estate. Again, we need to look at the title of the asset, whether you own the account in your name alone or jointly with another person. Other investment assets such as brokerage accounts, stocks, bonds, mutual funds are like cash assets and we need to determine how these assets are titled, as well. Also included in your estate are retirement accounts, such as IRAs (Individual Retirement Accounts), 401K, 403B, TSP (Thrift Savings Plan), and annuities (qualified and non-qualified). The next step is to start thinking about who should receive these assets upon your death.
Even though clients are under the assumption that life insurance is not taxed, the value of the life insurance policy is counted in your estate for estate tax purposes when you have control of the policy while you are alive. An example of control is if you can name the beneficiary on the policy, then the value of the policy is included in your taxable estate upon your death.
Vehicles and boats also need to be valued as part of your estate. Often vehicles and boats are titled in the name of only one person. Or there is uncertainty as to who owns the vehicles. We need to look at the vehicle and boat titles to determine ownership. Knowing how the vehicles are titled and taking steps now to make it easier upon your death are estate planning goals.
Everyone has an estate whether it is a large estate with multiple accounts or a person who owns a single checking account in their name. Planning as to whom should receive the assets included in your estate, when they should receive these assets, and how they receive the assets is important to all clients whether they have a large or a small estate. At Council Baradel, we work with all clients, and the size of their estate does not matter. Whether you have a modest estate or a large estate, you need to have an estate plan.
The first step is calling us at 410-263-6600 or using our website contact form to schedule your free initial consultation with one of our attorneys.