A Will is Not Enough

Surprise! Beneficiary designations on assets such as life insurance and retirement accounts trump anything that you state in your Will or Trust.

Thus, your estate plan is not finished just because you’ve signed a Will or Trust. You also must review your beneficiary designations to ensure that they are in sync with your overall estate plan wishes.

Several types of assets allow beneficiary designations, such as life insurance, retirement plans, health savings accounts, annuities, 529 accounts, Payable on Death (P.O.D.) accounts and Transfer on Death (T.O.D.) accounts.

Assets that have beneficiary designations typically avoid probate, which may be an advantage. However, if “my estate” is listed as the beneficiary, then the asset is pulled back into probate. Therefore, it’s typically best to name individuals as beneficiaries or, in certain cases, to name your Revocable Living Trust as the beneficiary. Assets in a Revocable Living Trust also avoid probate.

As a precaution, ask the company responsible for the asset for which you wish to designate a beneficiary to give you written confirmation of the beneficiary designations that they have on file for you. Check these designations for accuracy. Correct any errors so as to avoid future problems.

Don’t forget to change your beneficiaries when your life changes or your goals change. Life changes include marriage, divorce, and births and deaths of your intended beneficiaries or potential beneficiaries. Your ex-spouse is automatically written out of your Will when your divorce is finalized, but your ex-spouse may be able to inherit certain other assets, such as certain life insurance proceeds, if you fail to remove the ex-spouse’s name as the beneficiary.

Minors (children under age 18 in Minnesota) aren’t allowed to inherit assets directly. Thus, if a minor is in line to inherit, a custodian may be appointed under the Uniform Transfers to Minors Act to manage the asset until the child turns age 21. Or, if you’ve set up a Revocable Living Trust, you could name the trustee of your Revocable Living Trust as the beneficiary of the asset. That way, your trustee is able to manage the asset on behalf of the child until the child reaches the ages that you specify in your Trust. You may prefer that assets are held in your trust until the child is significantly older than age 21.

Consider working with an estate planning lawyer to discuss your options. Estate planning lawyers typically have experienced the pros and cons of various strategies, and may be of valuable assistance in working with you to address the particulars of your situation.

©2018 Wittenburg Law Office, PLLC. All rights reserved.

Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney licensed to practice law in the state where you live. Wittenburg Law does not expressly or implicitly warrant the accuracy or reliability of any of the Blog’s contents. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which Wittenburg Law is willing and able to accept representation of you.

Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305 952-649-9771 bonnie@bwittenburglaw.com www.bwittenburglaw.com