Beyond Wills and Trusts: Tools to Make Your Estate Plan More Robust

Many people believe a solid estate plan consists of a will and possibly a trust. While that’s an excellent start, wills and trusts are far from the only tools available. A robust estate plan may include a variety of other legal documents to address issues like taxes and probate disputes.

1. Gift Deeds

When you produce an estate plan, you determine who you want to receive your assets. In certain cases, transferring property while you’re still alive may be better. That’s where a gift deed may be useful. 

A gift deed is a formal document that transfers ownership of an asset to another person without “consideration,” or the receipt of something of value in exchange. While many assets can be gifted without a gift deed, these documents may be necessary for high-value gifts. The deed provides clear legal proof that you voluntarily gave away the asset and expect nothing in return. It protects the recipient from disputes and ensures that there’s no doubt about the property’s new ownership. 

Gift deeds do have some downsides, of course. For example, giving away an asset you still need can put you at financial risk. Furthermore, the value of anything you give away through these deeds counts against your lifetime gift and estate tax exemption. As such, they are best used for assets of moderate worth but substantial emotional value you do not need for financial stability. 

2. Transfer on Death Accounts

A Transfer on Death (TOD) account is designed to automatically transfer ownership of the assets it holds to named beneficiaries upon the owner’s passing. Until then, the beneficiaries have no rights or access to the assets. However, once the beneficiaries appropriately prove the owner has passed, they receive the assets without having them pass through probate. 

The primary downside of a TOD account is that the assets are still part of the owner’s estate. While they are protected from probate, they are not protected from creditors. If you have any debts when you pass, those creditors can claim the assets in the account before the beneficiaries may receive them. As a result, these accounts sacrifice some of the protections offered by trusts in exchange for greater flexibility. 

3. Nominations

When you buy certain financial instruments, such as life insurance, you are often asked whether you want to nominate a second holder. It’s a good idea to do so. Nomination ensures that someone you trust can immediately access your liquid and near-liquid funds when you are no longer available. However, unlike a TOD account, the nominee does not gain ownership. They simply have the right to use the funds according to your estate plan.

The primary goal of nomination is to ensure your loved ones can access the funds they need to cover your last expenses. Your nominee only needs to provide a copy of your death certificate to access the funds. In contrast, if you don’t nominate someone, your estate representative must navigate a significant amount of the probate process before accessing the funds. That can place an unnecessary financial burden on your loved ones. It’s best to name a nominee and avoid the problem entirely. 

4. Asset-Liability Registers

An asset-liability register is also known by the simpler name of “estate inventory.” The purpose of a register is to collect information about all of your assets, accounts, and debts in one place. It saves your estate representative substantial time and effort before and during probate. 

Your register does not directly grant anyone ownership of or access to your assets. However, a well-written inventory will help your representative track all the important accounts and allow them to log into your online portals as necessary. As a result, the probate process will take less time, and your beneficiaries will receive their inheritances more quickly. 

Talk to an Expert About Build a More Robust Estate Plan 

TOD accounts, nominations, gift deeds, and asset-liability registers are useful tools, but they must be used carefully to achieve your goals for your estate. You can talk to the experienced San Jose estate planning attorneys at The Dayton Law Firm P.C. to discuss the best ways to improve your plan. Schedule your consultation today to get started.