Q. My wife and I hold title to her home as joint tenants, and most of our cash assets are in the form of two large IRA accounts and one big annuity. We have basic wills which leaves everything to the other and then on to our children. Our son suggested that our wills may not control what happens to our assets when one of us dies. Should we be concerned?

A. Perhaps, in the sense that you wills will not control what happens to your assets when one of you dies. Rather, the form of title will control as to your home, and the beneficiary designations on your IRA’s and annuity will control what happens to those assets.

Here is the way it works:

Your Home: Since you and your wife hold title to your home in joint tenancy, when one of you dies the other will automatically become the owner by right of survivorship. The right of survivorship is the primary feature of joint tenancy. In essence, the form of title overrides your wills. It is only when the survivor later dies that his or her will may control who ultimately gets the home. While many couples in California do hold their home in joint tenancy, it is often not the best form of co-ownership. One principal reason: it does not optimize the tax benefits that go along with holding title as ”community property” where the home has appreciated significantly in value since the time of purchase.

Your IRA Accounts: Each of your IRA accounts will, upon the death of the IRA owner, go to the primary beneficiary named in the account agreement signed when you created your IRA’s. Presumably, the primary beneficiary for each of you is the other spouse and, if deceased, your children. However, the pattern of distribution very much depends upon who you designated as primary and contingent beneficiaries when you created your accounts. It is always wise to review these designations and retain in your permanent file a copy of the documentation you signed when you created your accounts. As a lawyer, I have been involved in at least one case where the IRA custodian lost the paperwork on a very large IRA account, almost costing the designated beneficiary a six-figure tax bill because of the resulting delay in distribution. The IRS has strict rules about handling inherited IRA accounts, and these must be observed on a timely basis to avoid unnecessary tax.

Your Annuity: the person or persons to receive your annuity would, just like the IRA, depend upon who was named as the primary beneficiary and contingent beneficiaries on the annuity contract, itself. The same would be true if you owned any other insurance products or policies. Where you have designated named individuals to be primary or contingent beneficiaries, the contract or policy controls and not your will.

In view of the above, whenever clients come in to see us for estate planning, we always urge a review of all beneficiary designations associated with IRA and other retirement accounts, as well as annuities and other insurance products. Where appropriate, the beneficiary designations can then be modified, so that the plan design accomplishes the clients’ goals and everything works together. In many cases, the clients choose to name their Living Trust as the contingent beneficiary of these contracts and policies, so that the plan of distribution integrates with that created in their trust.

Do you love reading and collecting books? Are you a rabid coin or stamp collector? Do you find peace and tranquility out tending your garden?

Whatever it is that you love doing; you can bet the people who love you are aware of it. These are the people who join you on your wilderness hikes; the one who might give you a rare baseball card for your birthday; or the friend who goes with you to the antique car show because he knows hobbies are better when you have someone to share them with. These friendships last a lifetime, and yet these friendships are often forgotten when people create their wills or estate plans.

Many people go to their estate planner with their descendents and their financial assets foremost in their minds, and that is as it should be; but your estate plan can be more than a just a way to distribute property to the next generation, it can also be an opportunity to say thank you to the people who have touched your life—by gifting to them meaningful representations of your hobbies and passions, and of shared experiences.

You can express how much you appreciate your best chess opponent by leaving her your favorite chess board, or encourage the interest of a young philatelist nephew by bequeathing to him your extensive stamp collection. All you need is an estate plan which includes a personal property memorandum—and which is correctly designed to recognize and refer to that memorandum.

Our office can help you create an estate plan that not only ensures the protection of your heirs and property; it also helps you leave a meaningful ‘thank you’ to the people who matter most.

A funeral comes at a time when the death of a loved one is recent and close, and many people are still in shock and in some cases struggling with the reality of loss.  Funerals help grieving loved ones come to terms with death and say their final goodbyes… but for the person planning the funeral the experience can sometimes be a frustrating, painful, and expensive experience. Planning ahead for your own funeral—discussing it with your loved ones and even including your wishes in your estate plan—can remove this burden from their shoulders when the time comes.

Although pre-planning a funeral is essential, pre-paying for a funeral can actually be detrimental.  According to The Funeral Consumers Alliance there are just too many things that can go wrong, “[prepaying for] funerals may not cover every item of service you and your family expect, and there’s often no guarantee the money you pay today will keep up with inflation to pay the cost of the service you’ve picked out.” In addition, “many state laws don’t offer much protection for your prepaid funeral money.” If you change your mind or move out of the area there’s no assurance that you’ll get your money refunded. That being said, although pre-paying may be a no-no, setting aside funds for a funeral—in an account, CDs, or a specially designated insurance policy—is always a good idea. Consider setting aside funds in a Pay-On-Death bank account: the funds would be immediately payable on your death to someone you trust, who then would use them to pay for your funeral expenses. The POD account is sometimes called a “Totten Trust” account.

In just about every will or trust you will find something about the estate “paying the deceased’s final expenses,” otherwise known as funeral and/or memorial costs.  As a small portion of what can sometimes be a very large and intricate document, this “final expense” clause can seem unimportant—but our firm knows better.

Talking about your wishes for “final disposition of your remains” is something that should always be discussed with your estate planning attorney. Whether you choose to pre-plan your funeral or not, having some basic instructions in your will or health care directive for your preferences regarding burial, cremation, organ donation and so on will be a huge help to your loved ones during a difficult and emotional time.