Attorney & Mediator
Attorney & Mediator

Estate Planning – Have you checked your beneficiaries lately?

As people come in to begin their estate planning, one of the issues we take a look at is whether they have beneficiary designations in place for any of their insurance, IRA’s or other assets.

What we often find is that these beneficiary designations were made years ago and have not been updated to reflect current choices.

For Life Insurance – pull out those policies and look to see who you named as the beneficiary.   Is it your ex-spouse? Your parents (prior to marriage)? Your parents (even though you now have adult children)?

People often forget this important issue when they have life changing events. Often after the death of a spouse, the survivor will update many things, but forget to change the beneficiaries on life insurance and IRA’s. Sometimes when a beneficiary dies, we are too overcome with grief initially to address this legal issue; then life moves forward and we forget.

Unintended consequences can result if we forget to address this issue. Life insurance is a contract and it passes outside of your Will or Trust. It is not controlled by the provisions of those estate planning documents.

If you pass away and your ex-spouse is on your life insurance, he or she will get a remarkable bonus that was unexpected and unintended.

If you pass away and your parents are still named as beneficiaries, they get the money, even if your spouse and children need the money. If your parents have passed away, the insurance company may insist on making the check payable to your parent’s estate. In that case, an estate will have to be opened in Probate Court simply to process this check, years after they have passed away.

Don’t permit unfortunate consequences to occur – check your beneficiary designations today – make certain that the right people will receive the amounts you intended.


Estate Planning – Fair and Equal are NOT the same

Fair and Equal are NOT the same thing.

In my estate planning practice, I see parents agonize over the equal distribution of property upon their death. They believe that it is crucial that each child gets an exactly equal share.

Before I continue, I will admit that many children believe that this is the right way to do business. I have seen some of them count the spoons in the kitchen, divide up the dish towels and count the pennies in the change jar. They will not be satisfied until they are certain that they have obtained their fair share, which they believe is the same thing as an exactly equal share.

I try to advise my clients that they may want to consider that fair and equal are not the same thing. When thinking about this, you may want to remember how you treated your children when they were younger. Did you refuse to get braces for one child’s teeth because you had not done so for another whose teeth grew in straight? Did you refuse to allow your son to play football because the equipment was more expensive than the track shoes your daughter needed for her athletic choice?

A family will in all likelihood spend more for a girl’s clothes than for a boy’s. The girls may eat less than the boys. As a general rule, we do not make these comparisons for children. They each get what they need – that is what is fair.

What we spend on their education, medical treatment and extras may differ as the years go along, yet, when planning for the disposition of our estates a new rule seems to set in.

There are many instances where it could be fair to be unequal.

If one child is quite affluent and the others are living in more modest circumstances and could use the assistance, is it right to give the affluent child the same share even if he or she doesn’t need it?

If you have a family owned business or farm and one of the children is working in the business, should the others be given an equal share of that business even though only one has poured his blood, sweat and tears into it?

If you have a child with a disability, is it appropriate to leave the same share to him or her when it can only be used to supplement his or her needs?

If one child has been physically and emotionally close to you and has assisted you for years, should his or her share be the same as the ones who are distant and have not visited often?

If one has a history of bad decision making and is a spendthrift, should he or she be given the same share, knowing full well that the money will be gone shortly after it is received?

Some thoughts to ponder as you consider your estate planning decision making. Perhaps the fair thing to do is to divide your estate into shares which appropriately reflect the individuality of each child, his or her contribution to your life and your family, and the place they are in on their journey.