Q. I read somewhere that there is over $100 billion of unclaimed property. How is this possible? How is it that so much property goes unclaimed? Is there a way that I can check to see if any of that belongs to me? And how can I ensure of that when I die, my property goes where I want it to go and doesn’t wind up as part of this $100 billion of unclaimed property? Thanks for your help!
A. When someone dies, determining the distribution of their estate can be an arduous task. Families are fortunate when the decedent (person who passed away) had the good sense to get their estate planning documents in order by establishing a strong and unified estate plan, which almost always means using a trust to consolidate assets while living and clearly designating who should receive what from their trust upon death. Without a strong and unified estate plan, it’s much more likely that property, upon death, goes unclaimed.
Reasons Why Inheritance Can Go Unclaimed
Most unclaimed property is property that should have been inherited by someone — a named beneficiary or an heir at law — but that named beneficiary or heir failed to do what was needed to claim the inheritance. There are many reasons why inheritances go unclaimed, and as I will discuss later in this article, having a trust in place will likely prevent these things from occurring. Below are some of the more common reasons that inheritances go unclaimed:
What Types of Property and Assets Go Unclaimed?
The following are some examples of the types of unclaimed property and assets that may go unclaimed, but again, it is much less likely if you have a trust in place and if you appointed a responsible trustee who presumably knows what you have and how to locate it.
If you have assets you need to track down, you can start looking for them using the resources in today’s Critter Corner.
Why Unclaimed Inheritance is a lot Less Likely When You Have a Trust in Place
If you haven’t done so already, be sure to considerestablishing a strong and unified estate plan with a living trust. As the grantor, or creator of the trust, you can name any competent adult as your trustee; some people prefer to choose a bank or a trust company to fill this role. You, as the grantor, will typically act as trustee throughout your lifetime, so long as you remain mentally competent.
In setting up a living trust, the trustee that is appointed will account for where everything is, so your family hopefully won’t run into the problems described above with your loved ones not knowing about certain assets and where they can be found.
A unified estate plan means that any assets that cannot go into the trust, such as retirement accounts, name the trust as the beneficiary upon your death, so that all assets will wind up going into the trust upon death.
It is also critical to formalize a plan for your assets, so they go where you want them to. A strong and unifiedestate plan allows you to allocate your assets according to your wishes. If you don’t have an estate plan, your money and property may not get to the correct person or may not be claimed at all. Without an estate plan, the state in which you reside will decide how your assets are distributed, and any unclaimed inheritance will go to the state.
Living trusts are also used to avoid probate and to protect the privacy of the trust owner and beneficiaries of the trust, as well as minimize estate taxes. Once it’s set up, you begin by placing your assets—including investments, bank accounts, and real estate—into the trust. At this point you no longer own those assets; they belong to the trust. And because your assets belong to the trust, they do not have to go through the probate process upon your death. (In essence, the trust is like a rule book for how your assets are to be handled when you die.)
You can also amend or change the trust at any time, while you are still alive, at your own discretion or in response to life changes such as marriage, divorce, grandchildren etc.
Make Sure Your Estate Planning Documents Are Always Up-to-Date
If you have already had your estate planning documents completed by our firm, call us and be sure to ask about the Farr Law Firm’s Lifetime Protection Program®, which ensures that your documents are properly reviewed and updated as needed, so that they will always have the proper effect under the law. This is one way to keep everything up-to-date and hopefully avoid assets from going unclaimed.
This article is Part 1 of the three-part series. You can read the other parts but clicking the links below:
Read Part 2 here. Read Part 3 here
If you or members of your family have not done Incapacity Planning or Estate Planning, or if a loved one needs nursing home care or even if your loved one is already in a nursing home, please contact us as soon as possible to make an appointment for an initial consultation:
Estate Planning Fairfax: 703-691-1888
Estate Planning Fredericksburg: 540-479-1435
Estate Planning Rockville: 301-519-8041
Estate Planning DC: 202-587-2797
About Evan H Farr, CELA, CAP
