Where It Goes When You Go

Where It Goes When You Go

Not all that long ago, I had a discussion with a client concerning his estate plan. The client needed to update his documents … which were a few decades old and certainly didn’t take into account a lot of changes that have happened in his life since they were written.

It’s important to do this periodically, especially when you experience major life changes like the birth of a child, divorce, or the death of a beneficiary, and even when there are no changes — just to make sure your wishes then were the same as they are now. A few decades is probably too long of a period for estate documents go untouched but, as the old saying goes, “better late than never.”

What You Need to Do if You’re Inheriting Money

As a beneficiary, what do you need to know if you’re receiving an inheritance from a loved one? What do you need to do? Read Are You Inheriting Money? Don’t Miss These 5 Steps to learn more.

During the conversation, a critically important but often overlooked item came up: The account level beneficiary designation. The gist was that, in his original will, the client — in addition to wanting to leave money to his immediate family — had an extended family member to whom he desired to leave a decent amount of assets. This is still a desire for the client. However, the problem is that, over time, all the major components of his estate have been titled with beneficiary designations naming immediate family and not the extended family member.

From IRAs and accounts with transfer on death (TOD) or payable on death (POD) registrations to life insurance and even the titling of his home and cars, practically everything was destined for the people named on those accounts. What was not, which amounted mainly to personal items and collectibles, likely would not cover what the client desired to leave this extended family member.

Here’s the takeaway: Remember that, even though it’s just writing down a name on an application, naming a specific beneficiary of an account is powerful. It likely means the account will never enter probate and not be disposed of according to your will. It is crucial that those designations are in line with your estate plan overall as they almost always take precedence over your will.

It’s not a warm and fuzzy topic but an important one. A few minutes of time reviewing your account beneficiary designations with your financial planner is surely worth the effort. Also, periodically consulting with a qualified attorney can help you make sure the whole picture makes sense as well.

If you have estate or other financial planning questions, just ask!

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Jason Speciner
Jason Speciner

Jason Speciner is a CERTIFIED FINANCIAL PLANNER™ professional, an Enrolled Agent, and the founder of fee-only firm Financial Planning Fort Collins. He is also a member of the National Association of Personal Financial Advisors (NAPFA), Financial Planning Association (FPA), and XY Planning Network. Since 2004, he has served clients of all ages and backgrounds with unique experience working with members of generations X and Y. To learn more, check out Jason's blogs and see the media he's been featured in.