Articles and Columns

Carissa Giebel column: Common issues overlooked in estate planning

Apr. 29, 2013 |

Assets are not always distributed according to the terms of someone’s will or trust.

If the trust is the owner of the asset or named as the beneficiary, the asset will be distributed according to the terms of the trust. If one or more people own the asset, the distribution at death is determined by one or more of the following: how title is held, the beneficiaries named, the terms of the will, or the laws of intestacy (laws determining the heirs when there is no will).

If an asset is owned jointly as joint tenants, the surviving owners receive the interest of the deceased. If title is held as tenants in common, the deceased’s interest will be part of his or her estate, and ultimately distributed under the terms of the will.

Sometimes parents will add a child on accounts as an additional owner. When the parent passes, the child will likely own the entire account, and often times, this is not the intent of the parent. Whereas if the child was added on the account as an Agent and all the children were added as beneficiaries, this may be more likely to accomplish the goals of the account holder. This way, the child named as Agent would have access to the account during the parent’s lifetime. At death, the account would be paid to all beneficiaries.

If there is no joint owner and there are no beneficiaries named on an asset, it will likely be part of the deceased’s estate and distributed under the terms of the will, or if there is no will, to the heirs as defined by state law.

The beneficiary designation form on file with the company holding the asset controls the distribution. It will be distributed to the person(s) named as beneficiary. If the beneficiary form names “my estate,” it will be distributed according to the terms of the will. If the beneficiary names the trust, it will be distributed according to the terms of the trust.

IRAs and other qualified assets work a little differently than most other assets. For non-spouse beneficiaries, they begin taking distributions from the IRA by Dec. 31 of the year following the date of death. The beneficiaries may take withdrawals based on their own life expectancies if desired, allowing them years of tax-deferred growth for traditional IRAs and tax-free growth for Roth IRAs.

If the estate is named as beneficiary of an IRA, tax deferral is cut short. For a Roth IRA, all funds must be distributed within five years. For a traditional IRA, all funds must be distributed within five years if the original IRA owner had not yet reached the age of 70.5. If the original IRA owner had reached the age of 70.5, the heirs would receive distributions based on the age of the original IRA owner.

A spouse named as beneficiary will generally have the following options: roll the inherited IRA into his or her own IRA, postponing any distributions until the age of 70.5; take a lump sum; transfer to an inherited IRA; or disclaim. These options should be discussed with a trusted financial advisor.

Make sure your estate planning is up to date so your goals are accomplished and it is easier on your loved ones.

Carissa Giebel is an estate planning attorney and partner at Legacy Law Group LLC. She can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it., or (920) 560-4651.

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