retirement

Don't make estate plan without help

Don Taylorq_v2.gifDear Dr. Don,
I am ready to either make out a new will or create a trust. My wife owns six $10,000 Series EE bonds. The bonds are in her name and the name of her deceased father. They do not mature until 2018.

I want to accomplish two things. First, I want to get my own name on the bonds as joint tenant with right of survivorship, so there is no hassle with probate or anyone else concerning ownership of the bonds in case of my wife's death.

In addition, I'd also like to apply to all of our assets the wording I am hoping to use on all transfer on death or payable on death documents.

The wording goes like this:
  • If both Pat and Jerry become deceased then the ownership will go to our four children: Kevin, Sean, MaryPat and Molly.
  • If Kevin is deceased, then his share would go to his daughter Emily.
  • If Sean is deceased, then his share would go to his two sons, Charlie and Ben.
  • If MaryPat is deceased, then her share would revert to the other three survivors.
  • If Molly is deceased, then her share would revert to the other three survivors.

Thanks in advance for any help you can render.
-- Jerry Juncture

a_v2.gifDear Jerry,
Reregistering the savings bonds should be a simple matter. Here's what the TreasuryDirect Web site has to say about this process:

If a Surviving Person Is Named on a Bond
If you are named in a bond's registration with someone else who is now deceased, you can:

  1. Do nothing with the bond.
  2. Redeem the bond by presenting it with adequate identification at a financial institution that pays savings bonds.
  3. Get the bond reissued (re-registered) in your name alone or with some other living person as long as the bond is still earning interest and is not approaching final maturity.

To have a savings bond reissued in this situation, you'll need to send a certified copy of the deceased person's death certificate with the bonds and a reissue request PD F 4000 to a Treasury Retail Securities Site.

The TreasuryDirect Web page "Death of a Savings Bond Owner" also explains the tax impact of the co-owner's death to the surviving owner.

Assets pass at your death either by will, by contract or by operation of law. If you die intestate (without a will), state laws of intestacy govern in the absence of the will. Assets not passing by contract will pass by operation of law.

Totten trust accounts -- also known as payable on death, or POD, accounts -- avoid probate because the asset passes to the beneficiary or donee upon the death of the account holder.

Rather than including the rather complex language you envision for the POD accounts, you could reduce it to a per stirpes division. A per stirpes distribution divides the decedent's estate by representation or by family group. Saying "POD our offspring per stirpes" should handle the passing of the assets in equal share to your offspring, or their progeny (if your offspring are deceased).

Per stirpes distribution is often the method of intestate succession if your spouse dies before you do. You can check out the intestacy laws in your state using CCH's Financial Planning Toolkit Web page, " Dying without a will."

It sounds like you're trying to cobble together an estate plan without the benefit of an attorney. I can't recommend this course of action. Regardless of the size of your estate, you can benefit from professional guidance. It's fine to talk about writing your will, deciding on establishing trust accounts, and looking to rename accounts to avoid probate, but you really shouldn't be doing this without a professional in your corner.

Thanks to Constance J. Fontaine, associate professor of taxation and the Larry R. Pike chair in insurance and investments at The American College in Bryn Mawr, Pa., for her assistance in answering this reader's question.

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "Financing a home," "Saving & investing" or "money."

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