Planning is Not a “One and Done”

Many of us have experienced or witnessed, familial conflict when someone dies without an estate plan. While most people believe having an estate plan is important, only a third have a plan in place.

Many people believe that all they need is a will, but a comprehensive and effective estate plan involves more than simply making a will.

A crucial yet often overlooked component of estate planning is reviewing assets, such as 401(k)s, pensions, and savings accounts, and ensuring you have listed a beneficiary for each of these.

Avoiding Probate

Designating beneficiaries often allows your assets to go directly to your loved ones without going through probate. In probate, the court will have to oversee the distribution of assets in an estate.

Selecting recipients for individual assets is essential because if you do not designate beneficiaries for your assets, they become part of your estate subject to probate. Those who receive your assets might be different from whom you had intended.

Reviewing your assets and ensuring you have your loved ones listed as beneficiaries gives an extra layer of protection that they will receive what you envision passing on to them.

Ensure You Have Designated Beneficiaries for These Assets

As part of creating your estate plan, you should assess your assets and make sure you have listed beneficiaries and that your selections are up to date.

If you have any of the following, check to ensure you have the person or persons you want to receive the assets listed as beneficiaries.

• Retirement accounts – Reviewing the beneficiary designations on all types of retirement accounts is essential.
• Annuities – Annuities provide regular payments to individuals over time, typically as a source of retirement income. Most plans allow you to select one or multiple beneficiaries.
• Pension Plans – If you pass away before retirement, some pension plans provide lump sum payments to named surviving loved ones.
• Bank accounts – Pay-on-death or transfer-on-death bank accounts allow you to list beneficiaries who assume ownership of your account after you pass away. This is different from a joint account, where you and another person both own the assets. In a pay-on-death account, your beneficiary takes ownership after you pass. You can add and change beneficiaries directly through your financial institution.
• Investment accounts – Like other financial accounts, investment accounts can be transferred to a recipient upon the owner’s death.
• Life insurance policies – Those with life insurance policies typically select who will receive the payment when they establish their policy. However, policyholders should remember to review and update their plans when circumstances change, such as after a divorce or death.
• House – When you create a transfer-on-death deed, you can transfer your house upon your death and bypass probate. For older adults, this can be a safer option than adding someone to the deed, as it preserves their full ownership of the property until death.
• Car – Certain states allow people to name a transfer-on-death beneficiary for their vehicles.
• Business Interests – If you own a business, be sure to review partnership agreements, shareholder agreements, or operating agreements for transfer provisions.
• Digital Assets – Some online platforms allow you to assign someone to manage your digital accounts after your death.

Multiple Beneficiaries and Successors

In many cases, you may name more than one beneficiary. For instance, a person with two children might want to leave an asset to them both. Depending on the type of asset, you can state how much of the asset each child receives.

Changing Beneficiaries

You can change whom you listed as a beneficiary as your relationships and circumstances evolve. When you designate a beneficiary on an asset such as an account, they assume ownership only after you die. Generally, they will not have an ownership interest while you are alive and can handle your own affairs.

Remember, establishing investment accounts of any kind are not one and done. They need your attention over time so they continue to be your wishes.

Be Educated! Be Proactive!