Beneficiary Designations Archives

Trillions of Dollars in Cash Windfall anticipated in Coming Years

A recent study completed by Accenture estimates that between $1 trillion and $3 trillion will be transferred to beneficiaries each year through 2050. Many people, however, may not be equipped with the appropriate way to handle such an inheritance. People may be questioning what they should do next after their life has been significantly changed.
There are emotional considerations to factor in as well since this is different from a winning lottery ticket and that the gift has been handed to you by someone who is no longer around. Many families have conflicts about how the money should be spent. Fights with siblings can lead to future problems. To avoid family conflicts, intergenerational meetings can be held prior to someone passing away in which a parent articulates their final wishes. This allows advisors to be the person intervening in family strife and minimizing conflicts after the fact.

There are four primary categories that should be considered by anyone who may be inheriting a significant amount of money. These include:
• Safety, such as insurance, personal transportation, medical expenses and home repair.
• Fun, like dinners and vacations.
• Future, such as money that will be untouched for a minimum of five years in investments.
• Cushion or cash for true emergencies.

Another optional category for some people may include gifting to charity. Talk to an estate planning lawyer to figure out what’s right for you.

Four Basics Steps to Your Estate Planning Process

Unfortunately, far too many people believe that estate planning begins and ends with a simple will but this can be a catastrophic mistake as wills are exposed to potential mistakes as well.

This is particularly true if you attempt to engage in estate planning process on your own without consulting directly with an attorney. What follows are four key steps to consider for your estate plan:

Learn the local laws as well as the real estate and probate rules in your individual state. If you own property in multiple states it is even more important to have an experienced attorney representing you and helping you put together your estate plan.
Never put a piece of property into a child’s name while you’re still alive without consulting with an attorney about the right strategy to do this. If the child eventually goes bankrupt, creditors may be eligible to seize the house.
Be careful of transferring bank accounts to children in order to avoid estate and probate taxes. With individuals living longer, this could leave will writers destitute in their retirement years.
Ensure that your beneficiary information is always updated and your wills are updated on a regular basis by scheduling consultation with an attorney every single year to discuss whether or not your estate plans are still meeting your individual needs.

Following these four steps could help to minimize the chances of disputes and potential problems later in life.

When it comes to approaching your estate planning, having a lawyer you can count on is critical. Knowing that you have someone who can help you as your needs change over the course of your life. A Massachusetts estate planning lawyer may be very helpful for your planning process.

You Need to Update Your Beneficiaries at Least Once Per Year

It is a good idea to have your beneficiaries clearly listed on any account in which the company asks for it, including your retirement accounts and your life insurance policy. Set aside a calendar reminder every single year to sign back in or to contact these companies and verify that the beneficiary information is still correct.

One of the biggest reasons for doing this is simply that your life may change. If you have not checked your beneficiary designation on your retirement accounts recently, you may find out that the designated beneficiary who is legally entitled to receive some or all of the benefits on your retirement plan if something were to happen to you is no longer accurate. This is particularly true if you have gotten remarried, gotten divorced, or had children since your initial retirement plan account was originally established.

For example, if you originally named a charity as your beneficiary, that charity may no longer be in existence. While many people have a reminder set to look at their wills every single year and update these materials, things that are written inside your will do not necessarily transfer over to your retirement accounts. At the same time, it is a good idea to make sure you also have contingent beneficiaries listed.

These accounts are held separately and therefore, the company is responsible for providing you with the beneficiary designations. In the event that something happens to you and you haven’t verified these accounts for years, the company is well within their rights to transfer the amounts inside your retirement accounts to the last known designated beneficiary. This could be a former spouse or someone else that you do not intend to receive these benefits.

Set a reminder every year so that you have the opportunity to meet with your Massachusetts estate planning attorney and talk about any other updates you need to make to your process.

Reasons to Revoke a Will

As you likely know, it’s important to have a valid will in the event that something happens to you. This allows your loved ones to receive assets that you choose when you pass away, and in conjunction with other estate planning strategies, may be important for helping make the process as easy as possible for your family.

That being said, there’s a good chance that your life circumstances might change after you put together your initial will. It’s important to ensure that you already have a relationship with an estate planning attorney if you want to change your will. Having multiple versions of your will can become confusing, and if you’re not careful, it could even open the door for family members to argue that the will entered into probate is invalid.

Here are a couple of reasons why you may wish to consider revoking your will and writing a new one with the help of a Massachusetts estate planning attorney:

Marriage
Divorce
A minor child becoming an adult
Winning the lottery or inheriting/receiving a large asset
Having more children

What seems like a small mistake on your end could render your new will invalid, so you need to work with your attorney to make sure that it’s clear the new version is accurate and recognized as valid. This is particularly true if you are changing your distributions significantly.

Remember, a will might look like a simple document, but it has big ramifications for your beneficiaries. Make sure yours is correct by working with a Massachusetts estate planning attorney.

Lessons Learned From A Multi-Millionaire Janitor

We don’t often hear about the passing of unassuming, elderly janitors… but when they leave secret multi-million dollar fortunes behind, that tends to get newspapers’ attention. Man mopping factory floor

Ronald Read lived in Vermont his whole life. He worked as a soldier, then a gas station attendant, and then a J.C. Penny janitor. He was well liked but lived a simple life, reportedly working right up until his death last June at the age of 92.

Upon his death, his friends and family were shocked to learn that he’d acquired nearly $8 million in stock holdings and assets over his life — and he left almost all of it to charity.

In reflecting on Read’s incredible story, The Washington Post says there are both lessons to learn and mistakes to avoid. Let’s look at a few items from each of their lists.

What Read Did Right, According to The Washington Post

Patience. Read held a lot in stocks, but he rarely traded. He owned most of them for many decades.

Dividends. “Read was not an active trader,” the Post says, but “he was an active buyer. There is a very big difference.” Read preferred stocks that paid regular dividends. He then used those dividend checks to buy more shares of the same companies.

Diversity. Read owned many different kinds of stocks, but he avoided technology and anything trendy.

Philanthropy. By designating charitable beneficiaries for his assets, Read was able to significantly reduce his estate’s tax burden. (In fact, in his case, the whole fortune passed tax free).

Revocable trusts work well. Read had one, and it made life much easier for his beneficiaries.

What Read Did Wrong (By Post Standards)

In praising his financial prudence, the Post is quick to question whether Read really made the most of his life. Friends and family say he did not enjoy his retirement. They wonder whether he might have been happier had he loosened the purse strings and “lived a little,” so to speak. Maybe.

Of course, most of us are driven to do that which we enjoy most. Who’s to say that Read didn’t lead exactly the life he found most fulfilling?

Whatever we might make of his frugal ways, the Post is absolutely right about one thing — we can all learn a lot of lessons here. Financial responsibility pays off. So does planning. Life is short. And above all else, never judge a book by its cover.

Estate Planning Nightmares To Avoid

When it comes to estate planning, there are some big mistakes that you should take pains to avoid.

(Photo credit: Wikipedia)

Problems can begin when parents and their offspring haven’t talked about the subject. And even when they do, they often don’t get into the proper level of detail.

There can be hurt feelings and misunderstandings as children often view the amount of money each one gets as how much each one was loved.

An article I saw recently on dailyfinance.com lists some of the biggest mistakes that can be made when it comes to estate planning. I thought it would be good to summarize them for you here, and if you want to read the entire story you can click on the link.

Mistakes to avoid:

1) Failing to plan. The article tells the story of a grandfather whose grandson had put his life on hold to care for the grandfather, yet the grandfather made no estate plans, so when she died, the grandson got no inheritance.

2) Simple administrative details can get in the way. This is illustrated by the story of a woman whose entire estate went to her new husband, with nothing going to her kids, because she forgot to update her beneficiary designation.

3) Sibling squabbles. Two children ended up fighting over possessions because their mother’s will did not leave specific items to specific children.

Getting the plan that is right for you takes some time and thought – I call this stage the “Design Meeting.” In some cases, the Design Meeting may actually be two or three separate meetings. But the important thing is that the final documents actually reflect your wishes.

Eyes Wide Open—What You Need To Know Before Remarrying In Retirement

Several weeks ago, I posted an article about senior dating and some of the resources available to help seniors who are divorced or widowed find a new partner. The article also mentioned that for various reasons, many seniors who do meet that special someone are reluctant to get remarried. But what if you do want to marry your new love? A recent article in USA Today addresses some of the issues couples need to consider before walking down the aisle again.

(Photo credit: Wikipedia)

Discuss each of your finances openly
Does your prospective spouse carry a lot of debt? Have either of you co-signed loans to help children from previous marriages? Questions like these need be asked before the marriage, not after. Many people are embarrassed about their debt and reluctant to discuss it. You should also review one another’s credit reports.

Don’t forget to change your beneficiaries
If you have a life insurance policy, an annuity, an IRA, or any other retirement account, review each of them and make sure beneficiary designations reflect your new relationship.

Think about getting a prenuptial agreement
It’s not the most romantic topic to bring up with your new love, but virtually every senior considering remarriage should have one.

Think twice before adding your new spouse’s name to your home
This is often one of the most contentious issues in second and third marriages. Children from previous marriages can feel particularly threatened by the potential loss of the family home. Instead of adding your new spouse’s name to the home, it is more prudent to give him or her occupancy rights.

If you are a senior considering remarriage, I invite you to contact me to discuss issues like these and any other concerns you might have.

Posts Categorized: Beneficiary Designations

What Read Did Right, According to The Washington Post

What Read Did Wrong (By Post Standards)