When individuals consider how assets pass upon death, they immediately think of Wills (and perhaps Revocable Trusts for probate avoidance). What often is not considered, and even misunderstood, is that even if individuals have executed valid Wills, their wishes may not be respected. Why – because those estate documents will not generally supersede asset titling and beneficiary designations. Consider this example: Mr. Decedent provides in his Will that current wife Number 2 shall receive all his assets upon his death. And if Wife Number 2 predeceases him, the assets shall pass equally to his two children from his prior marriage. His primary assets are his $1 million insurance policy which still lists his first wife as the beneficiary; his IRA, which names his two children as beneficiaries; and his residence, where the Deed names only his oldest child as a joint owner with right of survivorship. Mr. Decedent does not realize that assets that pass by beneficiary designation (e.g., IRA’s, 401(k)’s, life insurance), or by title if there is a joint owner with right of survivorship (e.g., house, bank or brokerage account), supersede any provisions contained in a Will. Therefore, under the facts above, absent state law to the contrary, wife Number 1 receives the life insurance, the children receive the IRA, and the house passes to his oldest child. There are not many remaining assets to pass to current wife Number 2 in Mr. Decedent’s Will. Further, even if current wife Number 2 predeceases Mr. Decedent, the oldest child still receives the residence – it is not divided evenly among the children. The moral of the story is you cannot do estate planning without focusing on how your assets are titled and the asset beneficiary designations. Those titling and beneficiary designation decisions are as important to the planning process as provisions in the Will.
Last month, John Dedon received two important and continuing recognitions as a Top Attorney in the financial planning and estate planning areas of law. Northern Virginia Magazine named John a Top Lawyer in the financial area of law. Top Lawyers by Northern Virginia Magazine is an annual peer-reviewed list based on surveys of other lawyers’… Read »
We are pleased to announce the 2020 Edition of The Best Lawyers in America© has named Sunny Cameron, Tim McEvoy and John Dedon as Best Lawyers. Best Lawyers has published their list for over three decades, earning the respect of the profession, the media, and the public as the most reliable, unbiased source of legal… Read »
I have previously written about the $15,000 annual exclusion, and Irrevocable Life Insurance Trusts (“ILIT’S”). ILIT’S are created primarily to own life insurance and remove the death benefit from the insured’s taxable estate. To achieve the desired estate tax benefit, premiums must be paid by the Trustee on behalf of the ILIT as the policy… Read »
Irrevocable Trusts, “ILIT” – short for Irrevocable Life Insurance Trust – are created to own life insurance policies. The significant advantage of having insurance policies owned inside an ILIT is that the death proceeds are not included in the insured’s taxable estate upon his death. Further, the death proceeds are not taxable in the surviving… Read »
The annual exclusion gift amount remains at $15,000 for 2019. The annual exclusion gift is the amount that you can give to any recipient during the calendar year without gift tax consequence. For example, in 2019, if husband and wife have two children, they each can give $15,000 to each child, total of $60,000. Upon… Read »
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About Revocable Trusts
John P. Dedon
John P. Dedon is a tax lawyer with a talent for explaining the complexities of tax law in lay terms. Working in the estate planning, asset protection and business areas for more than 35 years, John helps clients preserve assets and plan for the future with traditional planning tools, including Trusts (dynasty trusts, intentionally defective trusts, grantor retained annuity trusts), LLC and partnership entities, and cutting-edge concepts such as cryonic preservation trusts.
Fellow of the American College of Trust and Estate Counsel (ACTEC)
Martindale-Hubbell AV Rating/Top Rated Estate and Taxation Lawyer
Consecutive years named Washingtonian Best Lawyers; Best Lawyers in America® for Trusts and Estates; Washingtonian Magazine’s Top Wealth/Financial Advisor; Top Lawyer and Top Financial Professional by Northern Virginia Magazine.