Is Your “Who Get’s What” in Writing?


Have you ever had a goal you couldn’t seem to get accomplished, but then when there was a special event added to the calendar, it somehow got done? Losing weight before a wedding, completing a home project before company comes to stay, or finishing a gift before the birthday/holiday, for example?

There is something about the brain seriously taking that date on the calendar as the MUST BE DONE BY deadline, and you magically get it done. That is the best tip for getting your estate planning completed too.

Schedule a trip, put it on the calendar, put money down, and watch how you will magically get the attorney visit and document signing complete before you leave!

Then there are the details. Have you thought about certain items you have that you may want to go to someone specific? Or what I hear a lot these days is women recognizing that adult children often don’t want china, crystal, silverware sets, knick-knacks, etc. at all anymore.

And how about your bank account or IRA? Designating beneficiaries on accounts/real property or creating a personal property disposition list is an important task to make sure you complete.

Just like Step 10 in my book says: Remember that each beneficiary designation dictates the distribution of each account so make sure all of your beneficiary designations are current. Too often we list someone and then life changes, people pass away, or relationships change, so your beneficiary designations may need to change too.

  1. Consider naming primary and contingent beneficiaries on all accounts and policies. A contingent beneficiary specifies who would receive the account if both you and the primary beneficiary perished in a car accident together, for example.
  2. We are usually aware of the need to designate beneficiaries on retirement accounts, life insurance policies and annuities but you should also confirm they are current.
  3. You can name beneficiaries on non-retirement accounts, i.e., POD (Payable on Death) on bank accounts and TOD (Transfer on Death) on investment accounts, real property, and even vehicles in some states.

The best person to give you advice on naming beneficiaries is your legal advisor. He/she understands the big picture of your estate and knows what it is you are trying to accomplish.

Discuss with your attorney the option to add “per stirpes” or “by rights of representation” wording (the ability to include grandchildren if their parents predecease you) to a beneficiary designation.

Too often, people misunderstand and believe that once their will or trust is drafted, that takes care of everything so beneficiary designations don’t matter because they have it all spelled out in their will or trust.

No!

Remember, a beneficiary designation acts like a little mini-will in dictating where each account gets distributed, so the account never references the will or trust for distribution instructions at all on most accounts, unless the will or trust is listed as the beneficiary (and that may not be the best practice for tax reasons) or goes through probate because there was no beneficiary listed. You need to consult your legal advisor for beneficiary designation recommendations.

I often help those who have lost a spouse, and I strongly discourage anyone from considering it a DIY (Do-It-Yourself) process. One woman I had not worked with told me how she consolidated one account into another online, commenting how easy it was to take care of it electronically.

But she found out later that she had moved a tax-deferred account into a taxable account. She basically, unknowingly, cashed out an IRA. Ouch, significant unexpected taxes will be owed now.

I recently read about an executor who decided not to wait for the CPA or advisor’s advice on the distribution of his single aunt’s large IRA. So, he had checks issued to the non-spouse beneficiaries. Ouch again, those beneficiaries will owe significant taxes.

Again, not a time to DIY. Laws change. Account types matter. Different companies have various requirements for processing. Everyone is in a unique situation and has different needs. It’s a traumatic time of life.

This is all why I created The Before and After Loss Checklist Bundle to help make sure you and your advisors are prepared and thinking through the full scope of your needs.

We don’t need to dwell on end-of-life issues, but we can worry less about it if we think through and communicate our wishes. Set yourself a deadline to get your wishes organized and in writing that involves going on a trip somewhere. Decide, take action if needed and then get on with enjoying life!

Have you checked your beneficiary designations lately? Have you decided how to pass things along to family? How have you seen others deal with these end-of-life decisions? Let’s have a discussion!



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