There are 4 ways to hold assets and each has its own consequences when you die.
1) Assets held in Your Name Alone – will pass by your Will to your named beneficiary/s or by State regulated distribution if you have no Will. This is known as Probate. Try to minimize assets in your name alone to minimize Probate.
2) Assets with Named Beneficiary/s (such as Life Insurance, IRA’s, T. O. D. and P. O. D. bank accounts) – will pass to the named beneficiary/s at your death. Recheck beneficiary designations on all such accounts to make sure they’ve been named in the first place and they’re the ones you want.
3) Assets in Joint Accounts (such as bank accounts, mutual funds, etc.)- will go to the surviving joint owner/s at your death. All assets in a joint account are fully available to every joint owner (and their creditors). If you are holding a joint account with a non-spouse (husband and wife enjoy certain protections), please be aware of this potential pitfall; and finally,
4) Assets held in Trust – are titled in the name of your Trust (Revocable or Irrevocable) and pass to the named beneficiary/s at your death. Revocable Living Trusts are useful in avoiding Probate and minimizing Estate Taxes but are of little value for protecting assets against nursing home costs. Irrevocable Trusts, if drafted correctly, can be useful for protecting assets against nursing home costs.
Roger Levine is an Estate Planning, Elder Law & Probate Attorney with offices in Canton & Brockton, Massachusetts.