The two most effective alternatives are (i) to title assets as “Joint Tenants with Rights of Survivorship” and (ii) designating beneficiaries on financial accounts. In many cases, particularly between spouses, an entire estate can be transferred to the other just by utilizing these two methods.
However, as they may not be appropriate in all circumstances, it is still a good idea to have a will in place. Joint Tenancy with Rights of Survivorship is a form of property ownership between two or more people. When one joint tenant dies, the title to the property vests automatically in the surviving joint tenants.
This form of ownership is most common between two spouses as it relates to their home ownership. However, it can also be used for other beneficiaries, such as children. However, the potential tax ramifications of transferring property to children should be considered. Likewise, the relationships between potential beneficiaries, as well as with the current owner, should be considered as well.
If you have more than one child, and you add all of them to the title of your home, you are making them joint property owners. They will all need to agree on if and when to sell the property, if ever, and at what price. Also, bear in mind that, during your life, whomever you add to the title to the property is a joint owner and will have rights to control the sale and disposition of that property, as well as rights to the proceeds of the sale.
Disputes between co-owners of property can be expensive if they end up in court. Utilizing beneficiary designations is also a critical practice. If you have ever purchased life insurance, you are probably familiar with the concept. With life insurance, when you die, the proceeds from that policy are paid to the beneficiaries you designated with your life insurance provider.
Similarly, you can designate beneficiaries for many other financial accounts, including bank and checking accounts, annuities, IRAs, 401Ks, and brokerage accounts. Bear in mind, however, that your beneficiary designations will control the ultimate distribution of that asset, regardless of what your will says, so be sure that you include all the intended individuals as beneficiaries.