Essentials
Essentials of Wealth Transfer
Chapter 4, What do I share with my family and other beneficiaries?

Discussions about what is in your estate plan with your beneficiaries can be awkward. But having these conversations can prevent grieving heirs from having to locate important documents or to interpret your wishes. In addition, discussing estate plans early on can help beneficiaries plan for their future more effectively, managing their expectations for what may or may not come their way.

Here are some tips to potentially make these conversations more successful:

  • Schedule a specific time for the discussion. Make sure you have adequate time to share details and allow time for questions.
  • Share the goals behind the plan along with its structure — like how assets will flow when the plan is implemented. See infographic below for the ways different assets are treated.
  • Focus on the main objectives of providing clarity and preventing potential discord, while being true to your comfort level with the amount of detail you want to share.
  • Outline key roles and documents. Plan to share the identity of your executor or trustee as well as the location of important documents, such as power of attorney, living will, and healthcare power of attorney.

For guidance in designing a family meeting about your estate plan, talk to your advisor and estate attorney. Also, if having a face-to-face discussion is difficult, consider writing a letter that can be left with your estate planning documents to clarify your wishes to all beneficiaries as well as executor and trustee.

Infographic showing the four ways that assets pass to a person’s heirs. For details, click "view text alternative."

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How assets pass to your heirs

By contract

You name a beneficiary to receive your assets outright upon your death

Examples:

  • Life insurance
  • Pension plans
  • IRAs
  • Annuities
  • “Payable on Death” accounts

Assets go to: the person or people named as your beneficiary

How assets are distributed: beneficiary files a claim

By probate

Your assets are distributed as designated in your will, or pursuant to state intestate laws if you do not have a will..

Examples:

  • Tangible personal property
  • Solely owned real estate
  • Bank or investment accounts with you listed as owner

Assets go to: your heirs and other beneficiaries named in your will

Assets are distributed by going through probate to:

  • Prove validity of will
  • Pay off debts
  • File tax returns and pay taxes
  • Determine your beneficiaries

By law

You own assets as “joint tenants with rights of survivorship” (JTWROS) with your spouse or other individual. The survivor or “last to die” becomes the new sole owner.

Examples:

  • JTWROS real estate
  • JTWROS bank or investment accounts

Assets go to: the surviving joint owner

How assets are distributed: Any distributions are made at the discretion of the surviving owner

By terms of trust

You establish a trust and transfer the ownership of assets into the trust. Assets must be transferred to the trust during your lifetime.

Examples:

  • Real estate
  • Automobiles
  • Business interests
  • Bank or investment accounts
  • Cash

Assets go to: Principal and income beneficiaries named in your trust. These assets can be spread out for multiple generations.

How assets are distributed: according to the terms of the trust

Holding assets in trust allows you to specify how and when your assets will be distributed to your loved ones.

Talk to your advisors for help in evaluating how your assets are currently held, how they will pass to your heirs, and how to make changes, if necessary, with the assistance of your estate planning attorney.