Attorney & Mediator
Attorney & Mediator

Who are your beneficiaries?

Do you know who your beneficiaries are?  How your assets are titled?

Most people assume that their accounts are titled properly and that their beneficiary designations are correct.  Not necessarily so.  You may have opened accounts or purchased insurance years ago.  The designations and titling of these assets is vitally important.

Lots of former spouses are still named as a beneficiary on accounts.  This could lead to a really unfortunate distribution upon your death.

If your spouse has passed away, it is important to change the beneficiary designations on your retirement assets, bank accounts and life insurance policies.  It matters.  If you have not named secondary or contingent beneficiaries, your heirs could have to open an estate for your deceased spouse in order to receive the distribution of retirement benefits or life insurance proceeds.

Next, it is important to understand that beneficiary designations and transfer on death provisions trump what you have stated in your Will or Trust.  This could lead to unwanted results.  You may want your estate to go equally to all of your children.  If you have listed one child as the beneficiary on your life insurance or IRA, or if you have made them joint on your checking and savings account, the money will not be divided equally.  He or she will receive the distribution from the IRA and/or life insurance and then will divide the rest of the estate equally with his or her other siblings.

You may believe that the one child will “do the right thing” because they “know what you want.”  Maybe.  But maybe not.  All it takes is a serious disagreement among your children to change this.

Make certain that your beneficiary designations are up to date and correct.  Don’t leave it to chance – check it out.

Make certain that your division of assets is not altered by your beneficiary designations – make certain that your Will or Trust distribution match your beneficiary designations and visa versa.

Leaving a Roadmap to Assets

You have a Will or a Trust.  You are finished with your estate planning, right?  Not quite.

You know what you own, but will your Personal Representative or Trustee?

Make a listing of your assets – better yet – make copies of documents and include these with your estate planning documents so that your Personal Representative or Trustee will have a clear outline of exactly what you own.

Real Estate: How many parcels and where are they located?  Make a copy of the deed(s) and a property tax statement for each.

IRA’s, 401 K’s, Annuities: Prepare a listing of all of your tax deferred assets together with the beneficiary for each.  Make a copy of your recent quarterly statement for each so that your Personal Representative or Trustee has the name of the financial institution and the account number.

Life Insurance: Get the policies together.  If you don’t know where they are, someone else won’t either.  List the policies with the name of the company, the value and the beneficiary.

Cash Assets: Make a listing of the accounts.  Make a copy of your recent quarterly statement for each account showing the name of the financial institution or bank and the approximate value.  If you have listed a beneficiary on the account or have a transfer on death (TOD) provision, note that as well.

Vehicles, Boats and Trailers: Make a listing of these items together with their identification numbers, physical location and value.  Make copies of the titles for each.

Valuable Personal Property: Precious metals (gold or silver bullion or coins), stamp collections, wine collections, artwork, antiques, should all be listed with identifying information, the physical location of the item and the approximate value.  Best is to take a photograph of each item and place the photographs with the listing.

This roadmap will be invaluable for your Personal Representative or Trustee.  The death of a loved one is a stressful time.  It will ease the burden if your estate is organized.

Revocable Trusts – Funding

Many clients go through the process of having a well drafted estate plan prepared that includes a Revocable Trust.  After they have signed the documents and received the Trust, it is put away in the safety deposit box and forgotten.  They thought that they were all through.

Unfortunately, this happens often, but this is unfinished business.  A trust only controls the assets that are in the trust – titled in the trust.  This is known as funding.

It is usual for the attorney who drafted the trust to prepare deeds to transfer all real estate interests into the trust.  However, the grantors are not done.  All other assets need to be transferred into the trust.  If this is not done, the trust will not control the assets and it will become ineffective.

Property left in joint tenancy will pass to the joint tenant upon death.  Assets left in the sole name of one of the grantors will have to go through the probate process.

Once you have signed your Revocable Trust you need to follow through on the funding process.

  • Bank accounts (checking and savings) – you need to go to the bank and request that the accounts be transferred into the name of your trust.  The bank will prepare paperwork for you to sign.
  • Financial accounts – you must contact your financial advisor and inform him/her that you have signed a revocable trust.  Documents will be prepared to transfer your assets into the name of the trust.
  • Life Insurance – you need to execute new beneficiary designations.  Even if you choose to leave your spouse or partner as the primary beneficiary, you will in all likelihood want to name your trust as the continent beneficiary.


·           Retirement accounts, such as IRAs and 401(k)s – if you were to transfer these assets into your trust, you would trigger a distribution with negative income tax consequences. In some circumstances you may want to change the beneficiary designation of these accounts to your trust, however, you should discuss the tax consequences with your financial advisor and attorney.

Not Accounting for Assets Properly

A common misconception when doing estate planning concerns what your Will or Trust covers.  This can dramatically alter the distribution of your estate.

A Will controls those assets that are in your name alone at the time of your death.  Therefore, assets that you own jointly with another are not subject to the terms of your Will.  This is important to know because if you place assets such as savings or checking accounts into joint ownership with one family member, those assets will not be subject to the distribution scheme set forth in the Will.  The joint owner will gain the asset at the time of your death.

Additionally, life insurance , IRA’s, Roths, 401K’s and similar accounts, have beneficiary designations.  These assets are not a part of your probate estate and are not controlled by your Will.  The individuals you have named as beneficiaries on each of these assets will receive them upon your death.

This is important if you are counting these assets as part of your estate when you set up a distribution scheme.  You may believe that the Will can ultimately control all of your assets when in fact it will only control the assets in your name alone at the time of your death.  Without this knowledge your distribution scheme can go awry.

Similar problems arise with a Trust.  It only controls the assets that are titled in the name of the trust.  It also will not control your IRA’s, 401K’s, Roths, and similar accounts.  It will also not control assets that are not titled in the name of the trust.  Accordingly, your plan as to division of all of your assets may once again be altered by the fact that some of the assets are not subject to the direction of the trust.

Understanding your assets and how each of them can be handed down to future generations will assist in assuring that your estate planning goals will be followed.