(401) 307-5556When it comes to passing on your property to friends and family, you have options. Some formal, some informal. While informal methods might seem simpler in the moment, understanding the differences between approaches can help ensure your wishes are actually carried out. Let’s explore the various ways people plan for the distribution of their assets.
Informal Methods of Wealth Transfer in Rhode Island: Simple but Risky
I often hear people tell me they’ve used Post-it notes to designate who should receive certain items when they die. It might sound casual, but it’s surprisingly common. Others create what are called “holographic wills” which are handwritten documents that outline their wishes without formal legal preparation. Some people simply gather their family members together and verbally explain who should get what.
These informal designations can feel effective in the moment, and they certainly demonstrate your intentions. However, they have no legal teeth. If you truly want to ensure everything goes according to your plans, you should formalize your estate plan.
Why Formality Matters For Transferring Money or Property in Rhode Island
Here’s something many people don’t realize: every state has laws that dictate how your property will be distributed at your death if you make no other arrangements. These are called intestate succession laws, and they’re rigid. In the absence of a valid will or trust, courts will uphold these laws regardless of what you told your loved ones.
For example, you may have told everyone that you want your niece Susie to get the silver. But if you have a spouse or children and haven’t formalized this wish in a legal document, they will take priority under intestate law. Your verbal promises, however heartfelt, won’t override the state’s distribution scheme.
Formal Methods: Protecting Your Wishes
What Strong Estate Planning Attorneys Use To Transfer Your Money And Property After You Die
Wills
A will is the most basic estate planning document. It overrides intestate laws and allows you to dictate who will be in charge of your estate and who receives your assets. Most states have specific requirements for a will to be valid, typically including written form, your signature, and witnesses. When properly executed, a will gives your wishes legal force.
Living Trusts
A living trust is another legal instrument used to pass on assets, but it works differently than a will. With a trust, you must transfer ownership of your assets into the trust during your lifetime. This extra step offers significant advantages: it helps you avoid formal probate proceedings and keeps your affairs private, as trust administration generally doesn’t require court involvement.
Beneficiary Designations
For bank accounts, retirement accounts, and insurance policies, you can designate beneficiaries who will receive the funds directly upon your death. These designations bypass probate entirely and override what your will might say about those specific assets. It’s crucial to keep these designations up to date as your life circumstances change.
Transfer-on-Death Deeds
For real property, many states allow you to create a deed that dictates how the property will pass at the time of your death. This transfer-on-death deed allows real estate to pass directly to your chosen beneficiary without going through probate, while still allowing you to maintain full control of the property during your lifetime.
The Bottom Line
While informal methods of expressing your wishes might seem easier, they leave too much to chance. Formalizing your estate plan through legal documents ensures that your intentions have the force of law behind them.
Whether you choose a will, a trust, beneficiary designations, or a combination of methods, taking these formal steps gives you and your loved ones peace of mind that your wishes will be honored. Book a call with me today to get started.
