What Happens to Your Money When You’re Gone? Here’s How It Passes to Loved Ones (And how to make it a whole lot easier for them)

What Happens to Your Money When You’re Gone? Here’s How It Passes to Loved Ones (And how to make it a whole lot easier for them)

We all know we can’t take it with us, but many people don’t realize how their money and belongings actually pass to loved ones after they’re gone. It’s not always about having a will—how accounts and property are titled and who’s listed as a beneficiary can make all the difference.

Let’s break down how your assets can pass on, what the options are, and how to make things smoother for your family.

💼 How Different Accounts Pass to Loved Ones

Not all money is treated the same when someone passes away. The type of account matters.

1. Retirement Accounts (IRAs, 401(k)s, etc.) – Qualified Accounts
These accounts pass by beneficiary designation—not through your will.
✅ Make sure you’ve named both primary and contingent beneficiaries.
📌 You can choose “per stirpes” (more on that below) to ensure your loved one's children inherit if they’ve passed.

2. Bank Accounts (Checking/Savings)
Unless owned jointly, these go through probate unless you’ve added a POD (Payable on Death) designation.
✅ Ask your bank to add a POD form—it’s usually quick and free.

3. Brokerage Accounts (Investment Accounts)
These can be set up with a TOD (Transfer on Death) designation.
✅ This skips probate and sends the funds directly to your chosen person.

4. Life Insurance
Payouts go directly to your named beneficiaries.
✅ Be sure to review these designations regularly—especially after big life changes.

🏠 What Happens to the House?

If Owned Jointly With a Spouse (Right of Survivorship):
When one spouse dies, the surviving spouse becomes the full owner automatically. No probate needed.

Capital Gains and Selling the House:
Let’s say you decide to sell the house:

• A married couple can exclude up to $500,000 of capital gains.
• A single person can exclude up to $250,000.
• If one spouse passes away, the survivor can still claim the $500,000 exclusion if they sell within 2 years of the spouse’s death and meet other IRS requirements.

If the House Goes to Children:
Children inherit the home at a stepped-up basis, meaning the home’s value is reset to its market value at the date of death.
✅ This helps reduce capital gains taxes if they sell the home shortly after inheriting.

🧾 Using a Trust or TOD Deed for Real Estate

Revocable Living Trust:
If you want to avoid probate and have more control over how your home is passed down, a trust may be the way to go.
✅ Your home is retitled in the name of the trust, and the trustee (usually you, until you pass) manages it.

TOD Deed (Transfer on Death Deed):
This is like naming a beneficiary for your house!
✅ You stay the owner while you’re alive, but when you pass, the house transfers directly to the named person without going through probate.

⚠️ TOD deeds aren’t available in every state, but they are in Colorado (where many of our clients live).

📋 Checklist: Common Assets and How to Add Beneficiaries

👨‍👩‍👧 What Does “Per Stirpes” Mean?

When listing beneficiaries, you may see the option for per stirpes vs. per capita:

• Per stirpes: If a beneficiary passes away before you, their children receive their share.
• Per capita: Only the living, named beneficiaries inherit—others are skipped.

✅ If you want your grandchildren to inherit in place of their parent, use “per stirpes.”

👟 What Should You Do Now?

Planning how your assets pass on doesn’t have to be overwhelming. Here’s a simple next step:

✔️ Review your accounts and property
✔️ Add or update beneficiaries
✔️ Talk with a financial advisor and estate planning attorney to make sure your plan covers all the bases

✨ Let’s Make It Easy Together

You’ve worked hard to build your legacy. Let’s make sure it lands exactly where you want it to.

📅 Schedule a free consultation to review your estate plan and get clear on your next steps. Whether it’s setting up beneficiaries, updating account titles, or learning more about trusts and TOD deeds, we’re here to help and connect you with the best resources to answer all your estate planning questions.

👉 Dream. Plan. Achieve.

The information provided in this blog is for educational purposes only and should not be considered legal advice. Pursuit Wealth Planning and its advisors are not attorneys and do not provide legal services. For advice specific to your situation, please consult with a qualified attorney.