How should I open my accounts?

[jforex78]

What is the name of your state?

New Jersey

Hi,

1) - How should I open my bank and investment accounts, so that my wife does not automatically get money from them in case of a Divorce?

At the same time, I want the money to go to her and children, as surviving beneficiaries only. Without going into Probate.

Does opening a Individual Account with her as Nominee solve this? Or still takes the accounts to Probate?

Many times the Investment accounts do not have a Nominee feature.

2) -Does opening a Joint Account mean she will always be entitled to part of it in a Divorce?

3) - What is the order of precedence between a Will, a Account Nominee, and Beneficiaries on Life Insurance?

Of course, if they dont match.

Thanks a lot.

 

[LdiJ]

What is the name of your state?

New Jersey

Hi,

1) - How should I open my bank and investment accounts, so that my wife does not automatically get money from them in case of a Divorce?

At the same time, I want the money to go to her and children, as surviving beneficiaries only. Without going into Probate.

Does opening a Individual Account with her as Nominee solve this? Or still takes the accounts to Probate?

Many times the Investment accounts do not have a Nominee feature.

2) -Does opening a Joint Account mean she will always be entitled to part of it in a Divorce?

3) - What is the order of precedence between a Will, a Account Nominee, and Beneficiaries on Life Insurance?

Of course, if they dont match.

Thanks a lot.

Money accrued during a marriage is marital property, whether its in a joint account or a separate account. The only monies that are separate property are premarital funds, or funds gain through gifts or inheritances. Funds gained through gifts and inheritances do need to be kept in separate accounts to avoid comingling them.

If you wish those monies to pass through to your heirs without having to go through probate, then you need to list them as beneficiaries on that account, rather than nominees. Any asset with a beneficiary passes outside of the estate and therefore is not controlled by the will.

 

[jforex78]

Thanks LdiJ.

Two follow up questions -

Money accrued during a marriage is marital property, whether its in a joint account or a separate account.

Is this true about Investment Accounts also? Like stocks, bonds, mutual funds, real estate etc.

If you wish those monies to pass through to your heirs without having to go through probate, then you need to list them as beneficiaries on that account, rather than nominees. Any asset with a beneficiary passes outside of the estate and therefore is not controlled by the will.

Some investment firms dont have a way to appoint a Beneficiary. What can I do in that case to ensure the asset goes to wife/ children without Probate?

I see some or most of them have provision to Joint Account with Right of Survivorship. Does it require Probate?

Thank you.

 

[Taxing Matters]

Is this true about Investment Accounts also? Like stocks, bonds, mutual funds, real estate etc.

Each state's law on division of property in divorce is a bit different, so you would want to consult a divorce attorney in your state for details of how best to protect separate property. But generally if the investment accounts were funded with money that was marital property then the investments, too, are marital property. If the assets are funded by separate property and can be traced as such then those assets would be separate property at least to the extent of the original amount. Growth in value and/or interest that accumulates during marriage might still be considered marital property. That is something that varies by state.

Some investment firms dont have a way to appoint a Beneficiary. What can I do in that case to ensure the asset goes to wife/ children without Probate?

I see some or most of them have provision to Joint Account with Right of Survivorship. Does it require Probate?

There are several ways to avoid probate. Having the property held as joint tenants with a right of survivorship (JTWROS) is one of them. But if you title the assets that way then understand that the co-owners (your wife and kids) immeidately get a property interest in the account and could withdraw some or all the funds from it at any time, just like you could and (2) it may result in a gift that would require the filing of a federal gift tax return. Another way to avoid probate without making them owners of the accounts is to put them into a revocable living trust.

I suggest you see an estate planning lawyer for assistance with your estate plan. That'll do you a lot better than doing it piecemeal off information you get on the internet.

 

[PayrollHRGuy]

It is true for pretty much all property accrued during the marriage.

A Joint Account with Right of Survivorship would not be subject to probate for all of the joint account holders.

Though it should not be hard to find an investment firm that does allow a beneficiary. With a joint account, she could draw on it as easily as you could.

 

[LdiJ]

Thanks LdiJ.

Two follow up questions -



Is this true about Investment Accounts also? Like stocks, bonds, mutual funds, real estate etc.

Yes, its true about those as well.

Some investment firms dont have a way to appoint a Beneficiary. What can I do in that case to ensure the asset goes to wife/ children without Probate?

I have never heard of an investment account that could not have a beneficiary. If one like that exists, and you want to invest in it, then it will have to be controlled by your will.

I see some or most of them have provision to Joint Account with Right of Survivorship. Does it require Probate?

A joint account with rights of survivorship would not have to go through probate.

 

[jforex78]

I suggest you see an estate planning lawyer for assistance with your estate plan.

Sure, I agree. I am in the process of finding a professional.

I am only asking these in a Forum capacity in the meanwhile, and I understand the advice here cannot be considered legal.

Each state's law on division of property in divorce is a bit different.

I am in New Jersey.

There are several ways to avoid probate. (JTWROS) is one of them... and could withdraw some or all the funds from it at any time, just like you could

Correct, only if they know about these investment accounts.

Another way to avoid probate without making them owners of the accounts is to put them into a revocable living trust.

Do I have to change the Title of all these accounts to the Trusts?

Thank you.

 

[jforex78]

With a joint account, she could draw on it as easily as you could.

Yes thats a concern... but these are illiquid investments that only cash after every few years, like Real Estate shares. And my family is not aware or actively involved with them.

So the primary concern here is to pass them along to them just in case, without a probate.

 

[jforex78]

While exploring ways to avoid Probate -

Can I list all my investments in my Life Insurance and make my family the Beneficiary? Does that avoid Probate?

That way I wont have to have Joint Accounts, where the firm cannot Designate a Beneficiary?

 

[jforex78]

I have never heard of an investment account that could not have a beneficiary.

If one like that exists, and you want to invest in it, then it will have to be controlled by your will.

But a Will has to go through Probate, correct?

It seems a good strategy may be, of course after confirming with a professional -

1)To have Individual Accounts with Benefeciary OR

2)If cannot designate a Beneficiary

A)Put them as Beneficiaries of Individual Accts in the Will.
OR
B)Joint Account with Right of Survivorship

The concern with 2A is the Gift Tax.

And with 2B is the Probate.

 

[LdiJ]

But a Will has to go through Probate, correct?

It seems a good strategy may be, of course after confirming with a professional -

1)To have Individual Accounts with Benefeciary OR

2)If cannot designate a Beneficiary

A)Put them as Beneficiaries of Individual Accts in the Will.
OR
B)Joint Account with Right of Survivorship

The concern with 2A is the Gift Tax.

And with 2B is the Probate.

You of course can do all of that, but it would be seriously easier to only invest in things that can be assigned a beneficiary...which is the vast majority of investments.

 

[jforex78]

You of course can do all of that, but it would be seriously easier to only invest in things that can be assigned a beneficiary...which is the vast majority of investments.

Correct I will always try to have a Beneficiary.

But several Real Estate Funds or Private Investment Groups are not that evolved to designate one. So the search for a non probate options.

1)
If I have to designate a beneficiary in a Will, does a Will always go through Probate?

2)
If I list such investment in a Life Insurance policy and designate a Beneficiary there, does it go through Probate?

Thank you.

 

[LdiJ]

Correct I will always try to have a Beneficiary.

But several Real Estate Funds or Private Investment Groups are not that evolved to designate one. So the search for a non probate options.

1)
If I have to designate a beneficiary in a Will, does a Will always go through Probate?

2)
If I list such investment in a Life Insurance policy and designate a Beneficiary there, does it go through Probate?

Thank you.

Correct I will always try to have a Beneficiary.

But several Real Estate Funds or Private Investment Groups are not that evolved to designate one. So the search for a non probate options.

1)
If I have to designate a beneficiary in a Will, does a Will always go through Probate?

2)
If I list such investment in a Life Insurance policy and designate a Beneficiary there, does it go through Probate?

Thank you.

A will MUST go through probate. A beneficiary on a life insurance policy passes outside of probate. Anything with a beneficiary passes outside of probate.

 

[PayrollHRGuy]

1. A will must be probated.

2. I don't understand what you mean by "list such investment in a Life Insurance policy"

 

[jforex78]

A beneficiary on a life insurance policy passes outside of probate. Anything with a beneficiary passes outside of probate.

Ok, so adding a Beneficiary on the Life Insurance seems to be a good way to avoid Probate, when I cannot designate a Beneficiary on an account directly.

I am yet to know if the Insurance can list different accounts and beneficiaries, or is it a blanket statement that someone is a Beneficiary for all assets.