The Importance of Aligning Assets with Your Estate Plan

Many perceive estate planning as a one-time chore that, once accomplished, can be filed away until their death. However, without being aware of the potential impact of changes in life circumstances or the unintended consequences of attempting to make changes on your own, your estate plan may be providing you with a false sense of security. Reviewing the ownership of your assets and any beneficiary designations regularly will help prevent common mistakes.

Joint Ownership Additions

It is very easy to add an individual as a joint owner with rights of survivorship of an asset such as a bank account or piece of real estate. Yet, if your will or trust relies on that asset being part of your estate to pay others (or debts, expenses, and taxes), there may be a problem. Joint ownership can often lead to will contests and lengthy court battles. Before succumbing to the temptation of joint ownership, speak with your estate planning attorney to understand if this is the best course of action given your existing plan.

Changes to Beneficiary Designations

Beneficiary designation changes can have unintended consequences on your estate plan. The policy may be payable to your trust to cover the cost of gifts at death, pay taxes or other liabilities, or cause a more equal distribution of your assets. Similarly, a retirement account due to an individual but changed to another may result in adverse income tax consequences and disrupt an overall distribution plan to the extent it conflicts with your Will or Trust. You may upend the intention of your estate plan by casually changing a beneficiary designation.

Acquiring and Disposing of Assets

Many people acquire and dispose of assets throughout their lifetime. While changes to assets are sure to occur, many forget to investigate how this may impact their estate plan. For those who have chosen to create a trust, retitling of newly acquired assets is of the utmost importance to protect the integrity of an estate plan. Likewise, for those who choose to create a simple will only, ensuring there is enough money to cover expenses as well as pay out specific gifts is important to check as assets change.

These are some of the more common mistakes people make that can negatively affect estate planning goals. Regularly review your intentions and legal documents to clarify changes in assets, lifetime gifts, beneficiary designations, and joint ownership additions.