When it comes to your assets, you want to make sure that you account for everything. Some people choose to keep their money in a bank account. Others may choose to stash assets under their mattress, in a coat pocket, in a shoebox, or buried in the backyard. Whatever the case may be, you’re doing your job in making sure you account for everything, right?
That’s what you would like to think. Unfortunately, that’s not the case. Even if all your assets are in your possession, you’ll need an estate plan to make sure the assets are properly distributed to your preferred beneficiaries. One way of accomplishing that is through setting up a Pay on Death (POD) account. A Pay on Death account is set up with a bank or credit union, in which the client designates beneficiaries to receive all of the client’s financial assets upon passing. This would include anything related to 401K and IRA.
Whereas a Pay on Death account is used for monetary means, a Transfer on Death (TOD) account is used for proprietorial means. This would include real property, vehicles and shares in stock, if there are any.
Another way to direct assets at death is to prepare a will that dictates to who they are going to. This isn’t just limited to money though. This can include things such as real property, vehicles and other valued possessions.
Let’s imagine someone passes away with all these assets under the mattress, and there’s no Transfer or Pay on Death account. What happens in this case? If there is a will in place, the court must follow the will’s instructions. However, if there was no will and no Pay or Transfer on Death account, then the assets must be distributed according to the State’s laws, which vary by State.
Taking a look at the State of Michigan’s laws of intestacy, there are various ways in which the assets can be distributed, depending on who is surviving.
When there is a surviving spouse and children of the decedent are also the spouse’s, the surviving spouse will inherit the first $150,000 of intestate property, plus ½ of everything beyond that. The other half goes to the children. If, however, the child or children of the decedent are not the surviving spouse’s, then the spouse inherits the first $100,000. Then parents can be involved too. If the decedent has no children, but a surviving parent, then the spouse inherits the first $150,000 of the intestate property, plus three-fourths of the balance. After that, the parents receive everything else.
There are a lot of “what-ifs” when it comes to determining how the assets would be distributed. It all depends on who is surviving. With that said, what if there’s someone you don’t want to receive assets who would through the laws of intestacy? Having a Transfer on Death account and/or will as part of your estate plan would allow you to keep that person from receiving anything.
That’s why we encourage you to prepare an estate plan. On top of that, we encourage you to keep track of it, especially the will in this case. If you need an estate plan prepared and need guidance on which tools are best for you, give The Probate Pro a call today at (877) YOUR-FIRM.