Investors over the years have told me that have it all worked out. “I’ve got a will, a trust and spoke to an attorney.” Often, those instructions were done years ago, sometimes decades ago.
So when you die, where’s your dough go?
It can be a difficult process. It all has to do with the instructions, or lack of, that you left before you passed away. What actually happens is determined by you and your state and local inheritance laws. I know, I really didn’t answer the question, but let’s go a little further because there are so many variables.
Here are some of the gold diggers, uh people, that will probably get a piece of your estate:
If you are married, most of your money will pass to your honey when you die. It will allow you to avoid probate on jointly owned assets. If you have assets just in your name, these funds will pass through the probate process if they don’t have a beneficiary designation. I have discussed this in previous articles. Make sure you have a beneficiary named even on things that don’t require one.
Your Other Beneficiaries
The other people named in your will, trusts or listed as beneficiaries will receive whatever portion you designate once you die. By listing who gets what, it will be easier on your brother, sister or kids as executors to distribute the assets. That way you don’t have two family members arguing over that antique table that each one swears you left them!
I’ve said this before, any named beneficiary supersedes the beneficiary listed in the will. A great example is a life insurance policy. You list your spouse as the beneficiary on the life insurance application, then in your will donate these proceeds to a charity. Uh oh! The spouse gets the funds not your charity. Make sure you have a good financial planner and estate attorney to review your beneficiaries at least once per year.
If you die and owe money, then your estate and its executor is responsible for paying those debts. In some cases, the debt exceeds the estate assets. With that much debt, sometimes the courts and a judge have to step in to decide which creditors get what assets. Sort of an estate referree. Creditors have a certain amount of time to file claim to what they are owed. That’s part of the probate process too.
Now if you have a large estate, then you might have to pay estate and inheritance taxes. Beneficiaries will only receive their inheritance after the taxes are paid. Yep, your old Uncle Sam has his hand out even when you are dead! In the recent sad death of Phillip Seymour Hoffman, if he had married his long-time partner, the $35 million estate could have passed tax free to her. Just by getting married he could have protected 40% of the estate.
If you’re not sure if your estate and beneficiaries are up to date, seek out a knowledgeable estate planning attorney. Use the tools available so that the money you worked hard for goes to your loved ones or your favorite charity. If you like me article, subscribe here! I’ll make my underpaid virtual paperboy deliver my articles to your inbox every Friday.