When we talk about estate planning, the first things that come to mind are wills and revocable trusts. These are the best ways to make sure that the assets are divided to the proper beneficiaries when the time comes. These allow a person to control their assets and determine where they go when they pass away.
But at the same time, these can get quite costly. So what if one doesn’t have the finances to spare to execute these types of estate plans? There are three things that they can do instead:
- Pay on Death Beneficiaries
- Joint Ownership
- Lifetime Giving
Pay on Death Beneficiaries
Pay on death beneficiaries are those that are set up on all of a person’s financial accounts. When they pass away, their assets will immediately go to the named beneficiaries, without the need to go through probate.
So it’s important to have a pay on death beneficiary listed on all accounts. Otherwise, the assets will have to go through probate. Further, the beneficiaries should be very straightforward. It should state a beneficiary and backups.
As much as possible, minors should not be named as pay on death beneficiaries. When minors are named, they will get the asset through a guardianship and the estate will be charged an additional $5,000 to get the money to the minors.
In a joint ownership setup, the assets will be immediately owned by the joint owners when one of them passes away. When spouses are joint owners of their house and the joint ownership has a right to survivorship, the other spouse gets the house when one of them passes away. This also doesn’t need to be overseen by the court in probate.
It’s also important that kids are not made joint owners, whether they are minors or not. This is because there’s a high chance that these children won’t live there when they grow up. And if they become owners of the house, they don’t get homestead protection.
Assets are not only transferred upon death. There are a lot of ways to give away assets while a person is still living. Children can be bequeathed with assets during the lifetime of their parents. And some excess money can also be donated to charities and causes a person believes in.
Lifetime giving is at the liberty of every person. No one can control it and approval from the court is not necessary for these forms of transferring ownership.
A person can still plan their estate and control how their assets are passed down even if they’re broke. These are some of the ways that they can do it. An estate planning lawyer can help uncover other possible options.