You Need to Get Owner and Beneficiary Designations Right
In estate planning, asset ownership and beneficiary designations are the cornerstone of a well- crafted estate plan. They require careful consideration and should be reviewed regularly. Proper designations ensure that your assets are protected and distributed according to your wishes, smoothly, and without legal hurdles.
A beneficiary is a general term, but it can also be called pay on death (POD) or transfer on death (TOD) for certain accounts. This isn’t just a procedural step; it has profound implications for how your assets are protected and ultimately distributed after your passing. It is imperative you disclose all assets and accounts during planning, including that old life insurance policy your parents got for you years ago or the IRA you inherited, but haven’t touched.
Part of the Elder Advisors Law process is a discussion about your assets and how to make the proper ownership and beneficiary changes. Any updates made to your accounts should trigger a confirmation letter or email from the company that has your account under management. We recommend keeping those confirmations with your estate planning documents for easy reference.
Choosing the Right Beneficiaries
Designating a minor as a beneficiary can have major complications because they cannot directly inherit assets until they turn 18 years old. Naming a minor as a beneficiary should be approached with caution and discussed with trusted professionals such as your estate planning attorney and financial advisor.
If you have a disabled beneficiary that is getting assistance or benefits, inheriting money directly can cause them to lose the support they waited months or years to receive. They can lose their healthcare or even the roof over their head. There are special planning considerations involved in this type of scenario, and the attorneys at Elder Advisors Law specialize in making sure your plan is integrated to take care of all your loved ones, including those with special needs.
Directing Assets to a Trust
Trusts are a strategic tool to avoid the probate process, protect assets, and create a smooth transition when you’re gone. However, incorrect beneficiary designations can lead to probate, even if you have a trust. The attorneys at Elder Advisors Law will determine the changes needed for your accounts and property so it integrates with your estate plan. Then, we will walk you through the instructions to make those changes. If you have a trusted financial advisor, we welcome their assistance with this process.
It is important to note, if the beneficiaries on your accounts do not follow what is outlined in your trust, it may not be distributed as you intended. And incorrect ownership of an account may leave your hard-earned assets unprotected.
Most estate planning law firms don’t guide clients through the
funding process where these changes are done. We understand that ownership and beneficiary change forms are complicated. We’re here to help our clients understand the updates needed and give them the guidance and information to make the changes.
Handling Assets Outside of a Trust
For those without a trust, creating a comprehensive will is the first step to ensure assets are distributed the way you intended. It’s also important to make sure you have beneficiary designations on life insurance policies, retirement accounts, bank accounts, investment accounts and other assets that typically pass outside of a will. These designations should be consistent with your overall estate planning goals. If the asset, including property, does not have a beneficiary, it will end up in probate process.
The Importance of Regular Review
Life changes necessitate a review of your estate plan. This practice is vital in avoiding future legal issues and ensuring your assets are distributed according to your wishes. At Elder Advisors Law, we understand the nuances of effective estate planning and are committed to guiding you through the process. Our TLC Maintenance Program is set up to make this as easy as possible. Contact us today to enroll in the program or, if you’re already a member, let us know if you have a question or need assistance with funding your plan. We encourage everyone to take a proactive step toward securing your legacy and the future of your loved ones.
