For most clients, the designated goal of estate planning is to decide who receives what assets and when they receive them. Although many clients may formulate their own clear idea of who should inherit their properties, a number of details should be discussed with his or her financial planner before making decisions. Estate planning training teaches advisors how to properly plan and make the best decisions for the future of client estates. When it comes to property ownership, you cannot designate inheritance on what you do not own. Even if you have been the sole resident of a location for years, ownership rules for single people are simple. Unless the property is limited by contract or some form of shared ownership, advisors’ single clients can leave all property owned outright. The fact that some institution has a claim on the property, such as a mortgage on a house or a lien on a car, does not create shared ownership.
Property ownership rules for a married person can be more complicated. Rules affecting ownership of property acquired during marriage may restrict the right to leave property. During estate planning training, advisors will learn that two systems governing a married couple’s property exist; which one applies to the client depends on what state he or she lives in. The majority of states follow the common law system where, in general, the owner of the property is the person whose name appears on the ownership document. The other system, applicable in nine states, mostly in the West, is community property, where most property acquired during a marriage is owned equally by both spouses.
In community property states, spouses share ownership of most property, even if only one spouse’s name is on the title. During time spent in a financial advisor course, planners will learn that in these specified states, each spouse is free to leave his/her half of the property as desired, but has no control over the other spouse’s half. In the common law states, the spouse whose name appears in the ownership document owns that property. However, unlike community property states, common law states provide that each spouse has a legal right to claim at least a minimum portion of the other’s property at death, even if the deceased spouse left it all to someone else. If the client plans on leaving a spouse more than half the property, these laws are not applicable.
A financial advisor course in estate planning can provide the advisor with all the tools necessary to help a client obtain the desired disposition of their estate during life or after death. If spouses do not like the way state law defines shared ownership of property, they can usually agree to change it at any time. To accomplish this, the couple needs to prepare a valid contract, which can be prepared by a certified planner who has completed estate planning training. Estate planning can be complex, but does not have to be; advanced courses cover special trusts and planning techniques that are clearly applicable to almost any client.
Cory Bowman is Director of Ops at the Institute of Business Finance. IBF has helped thousands of members of the financial services industry attain designations. For more information about estate planning training
, financial advisor course
, visit http://www.icfs.com
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