MD Magazine’s recent article, “Making Sure Your Heirs Get What You Intend,” says that for many people, most of their asset value is held in accounts such as 401(k) plans, Individual Retirement Accounts (IRAs), annuities, and pensions. These accounts require the designation of beneficiaries for the assets.
It’s not uncommon after a few years, for a person to forget which beneficiaries they specified for a life insurance policy or pension. Perhaps it’s a first spouse and they’ve now remarried. There’s no “do-over” after you’re gone, which can lead to considerable confusion and stress. It will also ultimately disappoint your intended heirs. In addition, based on whether and how some other assets are designated in estate planning documents, some states may send the matter to probate. This can be a long and expensive process, since if the estate plan was done right in the first place, it wouldn’t be needed.
To be certain the heirs you intend inherit the assets you intend, remember these points:
- Keep track of the beneficiaries you’ve designated for your accounts. If you don’t recall, check with these institutions.
- Don’t rely on cookie-cutter, one-size-fits-all estate planning products. Get a custom plan from an experienced estate planning attorney, even though it may cost a little bit more money.
- Regularly review the beneficiary designations on your financial accounts and those in your will, to be sure they’re in sync and current.
Some people think they are required to create a trust for estate planning, when a well-drafted will and clear beneficiary designations will suffice. Talk to your attorney to determine if a trust is a good idea for your specific situation. The primary reason in some cases to have a trust is potential incapacitation. Therefore, a trust can empower heirs to manage your estate without first going to court to get a conservatorship, which can be time-consuming and costly.
A trust can also be way to manage your estate “from the grave.” A trustee is appointed to assure that assets are distributed according to specified instructions. This can be a good way to make sure heirs with dependency issues don’t burn through their inheritance quickly or spend it on the wrong things. Trusts can also be a smart way to ensure the care of a disabled relative.
The best way to avoid any issues with beneficiary designations, wills, or trusts is to work with a qualified estate planning attorney to design a customized strategy.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: MD Magazine (July 25, 2018) “Making Sure Your Heirs Get What You Intend”