When Creating a Trust Avoid This Mistake

Planning for a family’s transfer of wealth and ensuring successful execution is a complex process. Clients look to their trusted advisors for guidance when it comes to defining and executing their estate plans for future generations. Too often, individuals and families go through an arduous financial and estate planning process and then fail to finish implementing some of the most important steps: proper titling of assets and accurate beneficiary designations.

As part of a comprehensive estate plan, the trusted advisor must ensure that the trustee or the directed fiduciary understands how assets are intended to be titled and how they align with one another. More importantly, trusted advisors should work with their clients to ensure that all beneficiary designations are up-to-date and that assets are titled correctly.

Failure to title assets appropriately can cause assets to pass in a way the family did not intend. Lack of account titling and beneficiary designations can also lead to increased taxes, frustration, fractured families, and even lawsuits. A good, comprehensive estate plan, coupled with assistance implementing the desired estate plan, can help families avoid these issues.

Why is titling of assets so important?

Titling is a legal term that identifies how and who owns assets. In estate planning, the titling or ownership structure will impact how assets are distributed, whether probate is necessary, and the amount of estate taxes owed.

Probate is the name for the formal court process through which an estate is passed on to heirs after death. Depending on where one lives, it could be a relatively quick process, or it could be long and drawn out — up to 18 months in some states, and perhaps longer. Effective titling of assets helps to ensure that the probate process is skipped entirely. Issues with the probate system include additional costs, delays, and publicity.

Which assets pass through one’s will is often misunderstood. Certain types of ownership allow you to pass control of your assets to a joint owner, such as a spouse, without having to go through probate. These include:

  • Joint tenancy with rights of survivorship (JTWROS)
  • Joint tenancy by the entirety

It is important to note that only individually-owned assets pass through probate – and it can be surprising for surviving spouses how few individually-held assets are owned. A Revocable Trust can be used to avoid the probate system; however, assets must be titled to the Revocable Living Trust to accomplish this.

A revocable trust can also help facilitate the distribution of assets according to one’s wishes. Also known as a “living trust” because it is made in one’s lifetime, a revocable trust can help ensure the continuity of asset management. A revocable trust also allows individuals to maintain financial control of their assets by naming themselves as the trustee. This provides individuals freedom to move assets in and out of the trust by simply retitling them.

Though a revocable trust offers many benefits, it is not a replacement for a will. A will is still required to direct the distribution of personal assets of value which have not been included in the revocable trust, such as vehicles, boats, collections, and other personal property.

Beneficiary Designations

Beneficiary designation allows assets at death to pass through a contract. Examples are life insurance, annuities, IRAs and your 401(k)s. In each case, the owner of the asset has designated a primary beneficiary who receives the asset at death.

An individual can write in a will that they want all assets to go to one’s spouse at death, but if the beneficiary designation on any of these assets names someone other than the spouse, then those assets will not go to the spouse. It is extremely important to remember to update beneficiary designations when getting married or going through a divorce.

Another example: Enrollment in a 401(k) retirement plan requests that a beneficiary is named. At death, the retirement plan assets would automatically be distributed to the named beneficiary, even if the will directs that another party receive the funds. Because there is a designated beneficiary, the retirement assets would not be part of a probated estate, and therefore would not be under the control of a will.

That’s why it is essential to periodically review all the beneficiary designations to ensure they are aligned with the intentions of one’s will. Reviewing beneficiary designations is a key step when crafting a quality estate plan for a family.

Benefits of proper asset titling…

  • Avoids probate
  • Assists with the management of property
  • Gives family members immediate access to assets at death. 

Other types of asset titling to consider…

  • Tenants-in-Common
  • Transfer-on-Death (TOD)
  • Payable-on-Death (POD)

Final Thoughts

While wills are designed to control how and when assets are distributed upon death, they do not control all assets. Only assets that fall within the probated estate are under the direction of a will. This would include property that is titled under an individual name, such as real estate, vehicles, jewelry, or other personal property. Assets with named beneficiaries, such as life insurance, annuities, retirement accounts, bank accounts, and brokerage accounts will be distributed directly to beneficiaries upon death, despite the wishes outlined in a will.

A well-thought-out asset titling strategy allows families to control what happens to assets, minimizes exposure to taxes, and ensures that all wishes are carried out in the simplest and most efficient way possible. How assets should be titled depends on the nature of the asset in question and the desired goal, both while you are living and when it comes time to transfer the asset after death.

Asset titling, beneficiary designation, avoiding probate, and the role of trusts in this process can be tricky and complex. Trusted professionals can help to ensure that titling of assets and beneficiary designations are aligned with estate plans so that all desired wishes are achieved. Bottom line … finish implementing estate plans by ensuring assets are titled properly before death.

This publication contains general information only, and National Advisors Trust Company is not, by this publication, rendering accounting, financial, investment, legal, tax or other professional advice or services.

6 options for distributing tangible personal property in an estate

Most people are likely to leave behind “tangible personal property” when they die. Tangible personal property typically includes jewelry, clothes, vehicles, furniture, household furnishings, silver, books, art, photos and anything else you can touch. Part of the problem with distributing this property is that you cannot do so exactly equally. In addition, many items may have little or no monetary value but significant sentimental value. It is often not easy to foresee conflicts your family members might face when dealing with your personal property after your death. Sorting through your life’s worth of personal items can be overwhelming, unpleasant and time-consuming. Given the complexities, how can tangible personal property be divided fairly while minimizing conflicts?

Here are some suggestions:

  1. Give away items during your lifetime.

The first thing you can do to help your family members who will eventually be tasked with the overwhelming responsibility of sifting through your personal items is to start giving away your assets during your life. Declutter. Sell. Donate. Give away to friends or family. You can even give away items to your beneficiaries now.

2. Direct the sale in your will or trust.

When the estate includes a few items of significant financial worth that can’t be equally distributed among heirs, the property might be sold and the proceeds distributed equally as cash. Assuming items of sentimental value will be divided by some other method, other items can simply be liquidated.

3. Write down who you want to receive specific items of personal property.

Another thing you can do is spell out who you want to receive what in your will or in a separate written Memorandum of Gifts of Tangible Personal Property, where you list specific items in one column and the recipients in the next column. An important benefit of a side memorandum is that it doesn’t have to involve a lawyer, it does not need to be witnessed, and it can be changed and updated as you wish. It’s best to start by asking your children or other beneficiaries what they may want. That way you can maximize the value of what each person receives, rather than making assumptions that could be inaccurate.

If a side memorandum is revised over time, it’s important that you sign and date it. The most recent list will be followed if more than one list is discovered after your death. Note that for items of high value or other significance, identifying and distributing those items should be done in the will, because the memorandum is not binding.

4. Spell out a procedure for dividing personal property items in your will.

In the absence of any specific direction in the Memorandum of Gifts of Tangible Personal Property, or to the extent this memorandum does not address certain items, the items will be divided among your beneficiaries. If you anticipate conflicts among your family and friends over your personal property, you can spell out a method for distribution in your will or trust. Here are just a few examples:

  • To be divided in your personal representative/executor or trustee’s absolute discretion
  • To be divided equally among your beneficiaries in as equal shares as they agree. To the extent there is disagreement, the Personal Representative/Executor or Trustee shall sell or distribute any items over which there is disagreement.
  • To be divided and distributed as an independent third-party determines, after giving consideration to any preferences of the beneficiaries
  • To be divided and distributed in accordance with a lottery system
  • To be divided by taking turns by drawing lots to see who goes first, second, third, etc., and continuing to circle through the list, or people who went first go last in the second round, or a progression from round to round. These choices look as follows when there are four beneficiaries who we will name A, B, C and D:
  1. A, B, C, D, A, B, C, D, A, B, C, D
  2. A, B, C, D, D, C, B, A, A, B, C, D
  3. A, B, C, D, B, C, D, A, C, D, A, B

It can help to facilitate the process if the personal representative makes a list of the items with their appraised or estimated monetary values.

5. Utilize a bidding system.

Another approach is to give all the beneficiaries a certain number of points which they can apply toward various items on the list. This could be done blindly with each person making bids and the personal representative/executor simply awarding the items at the end. The problem with this approach is that some beneficiaries may be luckier or more astute in their bidding—one person getting most of what she wants and another getting virtually nothing. Another approach would be more like a silent auction, permitting beneficiaries to adjust their bids right up to a set deadline.

6. Implement a financial adjustment after items are distributed.

What happens if one person ends up getting items with a total market value of $10,000 and someone else gets items worth $14,000? You could say that it doesn’t matter, because everyone still was able to maximize what is of most value to him. Or, you could equalize the valuations at the end with the first person receiving an extra $4,000 from the estate. That way, no one keeps choosing items just to get the best market value. It may be that one person really only wants a few items, and someone else is selecting items to give to his children. Should the first person, who may not have children, be compensated in some way? There’s no wrong or right answer that applies in all cases. It’s worth polling the beneficiaries to see if anyone cares.

Whatever methodology is chosen, it’s always a good idea to keep the beneficiaries informed. This can be done by the grantor during life, explicitly in the will, or in a memorandum, to minimize any chance of conflict among the beneficiaries.

This publication contains general information only, and National Advisors Trust Company is not, by this publication, rendering accounting, financial, investment, legal, tax or other professional advice or services.

Speculating About Presidential Elections is Not Fruitful

So, I’m chatting with a buddy.  We are doing our best to maintain Social Distancing, wearing masks and sincere in our determination to avoid spraying potentially contagious droplets on one another.

My buddy opened up with “I am very worried about the stock market if Joe Biden gets elected”.  (“Market Worry” is not what we want our clients to experience.) Of course, just the day before, a conversation with someone else opened with the same worry about Donald Trump’s potential re-election.

To assist our buddy with calming the ‘Market Worry’ surrounding the upcoming Presidential Election I produced a slide titled ‘Markets Have Rewarded Long-Term Investors Under a Variety of Presidents’.  Upon even cursory examination it is revealed that­­, in spite of whether our President is a Republican or a Democrat, markets have trended up!

For further information – you might enjoy clicking through to this link:

Click Here to read more.

OUR VIEW:  Any prediction that the market will Decline (Or Advance) if a Democrat or Republican is elected is a Speculation with no basis in historical evidence.

My hope is that I was able reduce my buddy’s ‘Market Worry,’ which she cannot control, by pointing out that she has planned for market volatility by controlling what she can control. For retired investors, that could look like setting aside several years of expected ‘Cash Withdrawal Need’ in Short-Term, Investment-Grade, Globally-Diversified Fixed Income.

Think about it: If an investor were to set aside 15 years of spending in Fixed Income at age 65, and let the rest of her portfolio ride in equities, she would not have to worry much about short term stock market volatility. As the enclosed chart indicates, investors have historically had a good shot at positive returns over long periods of time.

My buddy then commented “I Feel Better About Not Outliving My Money”!  Hooray – Mission Accomplished!

Trusting you are living your life well, maintaining Social Distance and, finding comfort in a Purposefully Derived portfolio, I remain

On Behalf of the Firm,

Tom Warburton

PRESS RELEASE: Mr. Brandon J. Jaquis, BS

Thomas K. Warburton, Chairman of Warburton Capital Management, announced that Brandon J. Jaquis has joined Warburton Capital as a Client Service Specialist. In this role, he responds to client requests, assists in onboarding new clients and implements solutions to improve operational efficiencies.

Prior to his full-time service, Brandon assisted Warburton Capital part-time from January of 2019 until completion of his undergraduate studies from Oral Roberts University where he received a Bachelor of Science degree in Finance with a minor in Mandarin Chinese from Oral Roberts University in May of 2019.

Brandon graduated from ORU Summa Cum Laude with a 4.0 GPA.  At the graduation ceremony Brandon received awards for Outstanding Student in the Undergraduate College of Business, Outstanding Academic Achievement in Finance and Outstanding Senior Paper.

During his enrollment at ORU, Brandon was an Honors Program Scholar, Vice President of the Enactus Entrepreneurship Club, Treasurer of the ONE Club, an Outreach Team Leader and a Chinese tutor for fellow students.

Additionally, he participated in data science research with the Chair of the Undergraduate Mathematics Department, where he collaborated as an author on two academically published papers and worked on consulting projects for the Oklahoma Department of Commerce and Oral Roberts University.

Prior to graduation, Brandon also completed a financial operations internship with a Fortune 50 telecommunications company where he focused on software automation and the use of programming for organizational efficiency.

Brandon’s not-for-profit community service includes volunteering with the Thursday Night Lights homeless meal service and the Tulsa Dream Center after-school program.

Recently married to Hannah, his seventh-grade sweetheart, Brandon and Hannah live in Tulsa with their Italian Greyhound, Henry.

Warburton commented, “We are excited to welcome Brandon to our team as he exemplifies the core qualities of being ethical, being brilliant, being affable and having a servant’s heart.  We are confident Brandon will be an integral contributor in our mission to help people.” Warburton Capital Management was founded in Tulsa in 2006 and provides investment advisory and wealth management services to business owners, professionals, corporate executives, individuals, families, endowments and foundations. The offices of the firm are located in First Place Tower at 15 East Fifth Street, Suite 3675, Tulsa, Oklahoma, 74103.

This press release may also be seen here: https://www.tulsaworld.com/business/businesspeople/financial-brandon-j-jaquis-warburton-capital-management/article_262c71b2-ec57-11e9-8a55-83205c9c66bc.html


Thomas K. Warburton, Chairman of Warburton Capital Management announced the appointment of Dr. Emily K Carter DDS MSD to our Advisory Board of Directors.

Dr. Carter attended Bishop Kelley High School in Tulsa where she met her husband, Noah. She then graduated from the University of Kansas with honors and a degree in Human Biology.

Following undergraduate school, Dr. Carter attended dental school at the University of Missouri-Kansas City School of Dentistry. She graduated summa cum laude and earned her Doctor of Dental Surgery Degree. She was also awarded the Public Health award for her efforts to improve care for indigent and underserved populations.

She was inducted into the dental honor society Omicron Kappa Upsilon, which is limited to the top five percent of a graduating dental class.

Upon completion of her dental training, she was accepted into residency at the UT Health Science Center in Houston where she received a Master of Dental Science degree and Certificate in Orthodontics.

Dr. Carter takes an active role in meeting and exceeding the standards of her profession. She is an active member of many professional organizations including the American Association of Orthodontists, the American Dental Association, the Oklahoma Dental Association and the Tulsa County Dental Society. Emily received the coveted “Most Likely To Do Epic (Expletive Deleted)” award from her Women In Dentistry Study Group.

Dr. Carter gives back to the community with her husband, Noah, through their work with Catholic Charities where she served on the NextGen Committee, the Cystic Fibrosis Foundation where they chaired the Tulsa’s New Leaders event and Emergency Infant Services by chairing the Kaleidoscope Ball.

Emily and her husband, Noah, live in Tulsa with their four children, Liv, Rowan, Finn, Lael and their dog, Yoyo. Dr. Carter loves spending time outdoors on Turkey Mountain, reading, riding horses and supporting local business. Given her pragmatic approach to parenthood, Emily has also been dubbed as “Worst Mom Ever” and “Meanest Mom Ever” by her beloved children!  I’ve advised her that ‘this is part of parenthood’ and ‘if the children are smart, their perception will change over the ensuing decades’.

Warburton commented “Emily’s brilliance, charm, service to our community and ‘take no prisoners’ approach to life are all qualities I admire.  I’m confident Dr. Carter will assist Warburton Capital over the ensuing decades in actualizing our Core Value which is To Help People!” Please join me in welcoming Emily to our Team.

Warburton Capital Management was founded in Tulsa in 2006 and provides investment advisory and wealth management services to business owners, professionals, corporate executives, individuals, families, endowments and foundations. The offices of the Firm are located in First Place Tower at 15 East Fifth Street, Suite 3675, Tulsa, Oklahoma, 74103.

This Press Release may also be seen here in the Tulsa World: