Rocks, Paper, Sissors ... Beneficiary Designations?

Estate planning is so much more than having a will prepared and executed. In fact, when the ink is dry on your will ... the process is just beginning.

Why?

Title and beneficiary designations are the 600 lbs. gorilla in the estate planning jungle.

Ignore that big fella to your peril.

This was the subject of a recent WMUR article, titled “Money Matters: The trump card of estate planning.”

While the article focuses on beneficiary designations, title arrangements are equally tricky and troublesome.

For example, say you are leaving the family farm to your son Bobby Jo under your will, but for some odd reason you added your daughter Kelly Sue as a Joint Tenant with Rights of Survivorship to the deed.

Perhaps you were acting on the "legal advice" of Fred who works up at the grain elevator?

Again.

At your death, Kelly Sue inherits the family farm.

Ouch.

The WMUR article recounts how a widow was shocked to learn that her husband's ex-wife inherited his life insurance proceeds, even though his will left everything to her.

It seems he never go around to changing his beneficiary designations after the divorce.  

With certain financial instruments the beneficiary designations ultimately control the asset disposition.

Period.

Here are some commonly-owned assets that transfer by beneficiary designation: 

• Individual and group life insurance
• Traditional and Roth IRA’s
• Qualified retirement plans, such as 401k’s
• ESOPs (Employee Stock Option Plans)
• Contractual rights under deferred compensation plans
• Employment contracts

Teaching point: Creating (or updating) your will or trust does not "automatically" change the disposition of assets that pass by beneficiary designation.

Now that you have eaten of this particular "tree of good and evil," contact your estate planning attorney for a fresh review of your beneficiary designations.

Note: This review should include ensuring that you have "contingent" beneficiaries designated in addition to the "primary" beneficiaries.

But, wait, there is more.

Request confirmation from the respective financial institutions that they have made the desired designations. Thereafter, you should securely retain the records related to your beneficiary designations with your estate planning legal documents.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website. 

Reference: WMUR (May 21, 2015) “Money Matters: The trump card of estate planning”