Maximizing Your Estate Plan: Beneficiary Designations and Beyond
The Crucial Role of Beneficiary Designations in Estate PlanningEnsure Your Assets Go to the Right Hands
When it comes to estate planning, it's not just about what goes through probate; you must also consider assets that won't. Life insurance policies, retirement plans, and investment accounts are all crucial elements of your estate plan, and failing to update their beneficiary designations can disrupt even the most carefully laid estate plans. Life Insurance BeneficiariesDon't Let Life Changes Impact Your Intentions
Life insurance is a pivotal component of many estate plans. However, the beneficiaries you designate on your life insurance policy take precedence over any provisions in your will. So, when significant life events occur, it's essential to review and update your beneficiaries accordingly. For instance, married couples typically name each other as primary beneficiaries. As their family grows, they may adjust this designation to prioritize their children as contingent beneficiaries. This safeguards the children's financial future if one spouse passes away. But what happens if a divorce occurs and beneficiary designations aren't updated? In such cases, an ex-spouse could receive the insurance proceeds instead of your children. To prevent unintended consequences, periodically review your beneficiary designations with your insurance company, especially after major life changes. Retirement and Investment Account BeneficiariesAlign Your Intentions with Your Designations
Similar to life insurance, retirement and investment accounts allow you to designate beneficiaries. These designations carry immense weight after your passing. While you can change them at any time, it's crucial to ensure they align with your wishes. Your financial landscape may evolve over the years, making beneficiary updates necessary. By maintaining accurate designations, you can have confidence that your assets will pass to the intended recipients. |
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Bank Account Payable on Death Provisions
Secure Your Financial Legacy
If you hold joint bank accounts with your spouse, the surviving spouse typically gains automatic access to the account upon your passing. However, if you're single or have accounts solely in your name, consider inquiring with your bank about payable on death or transfer on death forms.
Completing these forms enables you to specify who should receive the account proceeds. This decision stands regardless of your estate planning documents or state law. It's a simple but effective way to ensure your assets go to the right hands.
If you hold joint bank accounts with your spouse, the surviving spouse typically gains automatic access to the account upon your passing. However, if you're single or have accounts solely in your name, consider inquiring with your bank about payable on death or transfer on death forms.
Completing these forms enables you to specify who should receive the account proceeds. This decision stands regardless of your estate planning documents or state law. It's a simple but effective way to ensure your assets go to the right hands.
Life Changes That Require Review
Stay Proactive About Beneficiary Designations
Marriages, divorces, and the loss of a spouse are clear triggers for reviewing your beneficiary designations. Still, other life changes are equally significant. As your children transition into adulthood, you may want to direct assets to them directly. This shift requires changing their status from contingent beneficiaries to primary recipients in your life insurance and retirement accounts.
Marriages, divorces, and the loss of a spouse are clear triggers for reviewing your beneficiary designations. Still, other life changes are equally significant. As your children transition into adulthood, you may want to direct assets to them directly. This shift requires changing their status from contingent beneficiaries to primary recipients in your life insurance and retirement accounts.
The Impact of Non-Probate Assets on Estate Planning
Don't Overlook These Crucial Assets
When crafting your estate plan, make sure to discuss all non-probate assets with your estate planning attorney. These assets count towards your estate tax liability, even though they bypass probate. Failing to account for them could leave your family with unexpected tax burdens.
Furthermore, it's crucial to consider the big picture when distributing your estate. Even if your spouse receives life insurance proceeds, they might still claim a spousal share of probate assets, potentially altering your intended distribution.
Stay vigilant about beneficiary designations and consult with an experienced estate planning attorney to ensure your estate plan aligns with your wishes and accounts for all your assets.
When crafting your estate plan, make sure to discuss all non-probate assets with your estate planning attorney. These assets count towards your estate tax liability, even though they bypass probate. Failing to account for them could leave your family with unexpected tax burdens.
Furthermore, it's crucial to consider the big picture when distributing your estate. Even if your spouse receives life insurance proceeds, they might still claim a spousal share of probate assets, potentially altering your intended distribution.
Stay vigilant about beneficiary designations and consult with an experienced estate planning attorney to ensure your estate plan aligns with your wishes and accounts for all your assets.
Meet Our Estate Planning and Probate Lawyers
Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna wrote a book on estate planning: The Road to Peace of Mind: What You Need to Know About Estate Planning. Jenna has helped many individuals and families with planning to protect their legacies and loved ones, and planning for the future and succession of their businesses.
Sharleen Tinnin: Sharleen is a 2010 graduate of Northeastern University School of Law, and earned her LLM in estate planning from Western New England Scool of Law in 2016. She has been with slnlaw since 2023. Prior to joining slnlaw, she worked with King, Tilden, McEttrick & Brink, P.C. on complex civil litigation matters. She previously worked for the United States Department of Justice, and received an "Excellence in Justice" award in 2017. Sharleen has helped many clients with planning for their legacies and their future, and navigating the probate process in Massachusetts after the death of a loved one.
How We Can Help
Our experienced team can guide you through the complexities of beneficiary designations and their role in estate planning. We'll help you review, update, and align your beneficiaries to protect your assets, minimize tax liability, and ensure your intentions are met. You can use the button below to schedule a free information call, or simply give us a call at 781-784-2322.
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