The Title of Your Assets Matters More Than Anything in Estate Planning

Many people believe that once they create an estate plan—especially one involving a trust—they have done everything necessary to avoid probate and streamline the transfer of their assets. However, one of the most common (and costly) mistakes is failing to update asset titles and beneficiary designations to align with the plan.

A Costly Mistake: When an Estate Plan Doesn’t Work as Intended

I recently met with a client whose brother, John, had passed away. Last year, John worked with an attorney to create a revocable trust-based estate plan to avoid probate and ensure a smooth transfer of assets. However, his largest financial account listed "my estate" as the beneficiary. Instead of passing outside of probate as intended, the account became part of his probate estate. This meant his will had to go through probate before anyone could access the funds—exactly what he had tried to avoid. The expensive trust he paid for? It was useless in handling that asset.

Your Estate Planning Attorney Cannot Change Your Asset Titles for You

When you hire an estate planning attorney, it’s important to understand their role. While they create the legal framework for your estate plan, they do not have the authority to change your financial account titles or beneficiary designations.

• Attorneys often assist with real estate by transferring property into a trust.

• Attorneys cannot access financial accounts or update beneficiary designations.

• You must take action by contacting banks, investment firms, and insurance companies to ensure your assets align with your estate plan.

Why Asset Titling Is Crucial in Estate Planning

1. Trust Planning Only Works If Assets Are Properly Titled:

A revocable trust is only effective if assets are properly retitled in the name of the trust or if the trust is listed as the beneficiary. Otherwise, those assets may still go through probate.

2. Wills Only Cover Assets in Your Name Alone

If you choose a basic estate plan (a will, healthcare proxy, and power of attorney), you understand the will must go through probate. However, even with a will, not all assets are controlled by it:

• Jointly owned property automatically transfers to the surviving owner.

• Accounts with designated beneficiaries (like life insurance and retirement plans) pass outside of probate.

3. Naming "My Estate" as a Beneficiary Can Be a Mistake

Certain assets, such as life insurance policies, IRAs, and retirement accounts, can bypass probate if they have the correct beneficiary designations. Naming "my estate" as a beneficiary forces these assets into probate.

• In rare cases (such as a testamentary trust), an attorney may advise doing this, but it's crucial to confirm if it aligns with your plan.

4. Joint Ownership Can Lead to Unintended Consequences

Jointly owned accounts often pass automatically to the surviving owner—which may not always be what you intended. If you added a joint owner for convenience, remember they will receive that asset outright when you pass.

What You Need to Do to Ensure Your Assets Are Properly Titled

✅ Know How Your Assets Are Titled

• Make a list of everything you own and the name that appears on each account.

• Any asset titled in your name alone must go through probate, even if you have a will.

✅ Review Your Beneficiary Designations Regularly

• Check life insurance policies, retirement accounts, and financial accounts to ensure they name the correct individuals or trusts.

• Avoid naming "the estate" as a beneficiary unless specifically advised by an attorney.

✅ Transfer Assets to Your Trust (If You Have One)

• You must update your account titles to reflect the trust or name the trust as a beneficiary.

• Be aware that traditional 401(k) and retirement accounts typically should not name a trust as a beneficiary due to potential tax consequences—unless there’s a specific reason to do so.

✅ Confirm Joint Ownership Structures

• Understand how jointly owned property and accounts will transfer upon your passing.

• Ensure joint ownership aligns with your estate plan goals.

✅ Consult an Estate Planning Attorney for Guidance

• An attorney can help ensure your asset titling supports your overall plan.

• Regular estate plan reviews can prevent costly mistakes.

A well-drafted trust or will only works if your assets are titled correctly. Many people assume that creating an estate plan is enough, but failing to update asset ownership and beneficiary designations can completely undermine your planning goals.

If you established a revocable trust, its primary purpose is to avoid probate. But if your assets are not titled correctly, probate will still be necessary—defeating the purpose of the trust.

Most importantly, your estate planning attorney cannot do this for you. While they provide the legal foundation, it is your responsibility to ensure your assets are properly titled.

Need help reviewing your estate plan? Contact our office today to make sure your assets align with your wishes. An estate plan is only as strong as the action you take to implement it!