Ensuring your wishes

October 14, 2021

logo for the Catholic Foundation of Southwest Iowa

During our lives, we are always careful about managing our assets and making sure we are in control.

Most people have strong feelings about how they want their assets distributed once they die. There may be friends, distant relatives and charities such as the Catholic Foundation of Southwest Iowa that you want to support. Without some basic planning, you could find that decisions will be made on your behalf that may not reflect your intentions.

There are essentially four ways a person’s assets can be distributed upon death.

  • By default according to state law,
  • By will,
  • By beneficiary designation, or
  • By living trust.

If you die intestate, that is to say, without having executed a valid will while alive, applicable state law will determine how your assets will be distributed. These laws will distribute assets to your closest relatives even if you wouldn’t have decided to divide things up that way. In addition, no provision for charity exists under the laws of any state, even if you made substantial charitable contributions during your lifetime.

If you die testate, i.e., having executed a valid will, then your assets will be distributed according to the terms of your will. Either way, your estate will be subject to probate, a court supervised process in which the person’s assets are identified; debts, taxes, and estate settlement costs are paid; and whatever remains is distributed (once again, according to the terms of your will if there is one but otherwise as required by state law).

Moreover, regardless of whether you die having executed a valid will, you can distribute certain assets without having to go through the probate process by leaving written instructions during your life, commonly referred to as beneficiary designations or payable on death accounts. Examples include funds remaining in an IRA or the death proceeds associated with a life insurance policy you own or other financial assets such as bank and brokerage accounts. If you don’t leave instructions then these assets will typically become subject to the probate process as well.

Assets placed in a living trust pass directly to named beneficiaries and do not go through the probate process. This is one of the advantages cited for this type of estate distribution vehicle.

Therefore, if you don’t leave instructions in the form of a will, living trust and/or beneficiary designations, the government will decide how to distribute your assets, not you. That means who gets your assets and how much is beyond your control. Without these planning documents, there is no way to support charitable causes that are important to you after you are gone.

If you would like more information about how you can include your parish, school or favorite Catholic entity in you long-term plans or more about other planning ideas, contact Sue McEntee at 515-237-5044.