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.

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.