Your Assets Matter

/ October 15, 2013

Financial Plan & Insurance - iStockA while back I introduced the topic of Revocable Trust versus a Will.  This post explores the first consideration in making this decision … what type of assets do you own, how are they owned and how do you feel about probate.  The types of assets you own and how you own then dictate how each asset will pass upon your death.  Potentially, you have three different types of assets:

  1. Joint assets
  2. Non-probate assets
  3. Probate assets

Joint assets are those owned by two or more people with a right of survivorship.  Upon the death of one of the joint owners, the surviving owner becomes the sole owner.  You do not look to a Will for disbursement of a joint asset.

A non-probate asset is one with a beneficiary designation, pay on death designation or transfer on death designation.  These assets will pass according to the designation form on file with the financial institution; and, if none, according to the institutions policy.  The designation trumps a Will or Trust; therefore, it is critical that all designations are up to date and accurate.

That leaves probate assets.  Probate assets are those owned by the decedent alone without a designation.  These are the assets that normally pass according to a Will.  In Minnesota, probate is required in the following circumstances (from an asset ownership perspective only):

  1. If decedent owned real estate in his/her name alone without a designation; or
  2. If decedent owned net probate assets of $50,000.00 or more.

The first question is whether or not there are probate assets in your estate.  The next question is how you feel about probate.  If there are (or will be) probate assets and probate avoidance is a goal, then a Revocable Trust would be an appropriate estate planning tool.

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