When it comes time to put together a thoughtful and effective estate plan, understanding how beneficiary designations interplay with your estate documents is vital. This is true whether you opt for a “will based” estate plan or a “trust based” estate plan.
Certain types of financial assets or holdings have beneficiary designations. Basically, this means that the account or asset allows for you as the owner to designate who will take ownership of the account or asset after your death. Some examples include life insurance policies, some 401K accounts, payable on death or “TOD” bank accounts, survivorship accounts, etc. With these types of accounts or assets, once the owner dies, the financial institution will transfer the asset and/or pay the money to the named beneficiary.
It is crucial to understand that no matter what your will, trust or other estate planning documents say, beneficiary designations will control. If you set up your life insurance policy to be paid to your spouse, that is who will get the check. It does not matter if you “intended” for the life insurance benefit to be divided among your children. If you name your eighteen year old daughter as the “payable on death” beneficiary of your savings account, the bank will transfer that account to your teenager daughter. It does not matter that you set up a trust to hold your assets and pay them out over time to her as she grows older and more responsible. The same is true with any other asset with a beneficiary designation. Failing to appreciate this fact or failing to ensure that your beneficiary designations correspond with the intent of your will or trust, can thwart even the most well thought out estate plan.
You owe it to yourself and your family to meet with an experienced estate planning attorney who can advise you on all facets of the process and work with you to create the estate plan that works best for you. Attorney Hank Doyle has 25 years of experience working with clients in Cary, Raleigh, Wake Forest, and surrounding areas. Call 919-228-4487 or fill out the contact form below to schedule your consultation today.