This article is written by Katie Charleston (Katie Charleston Law, A Professional Corporation)
Have trouble walking and chewing gum at the same time? Not Jennifer Lopez on the dance floor or Derek Jeter on the baseball field?
It’s called a lack of coordination, and it happens to estate plans as well as people. In fact, it’s possibly the most common mistake in estate planning. It’s a failure to consider all the different aspects of a plan and how they may (or may not) work together.
Take, for example, beneficiary-designated assets.
Do you have any of the below?
Chances are you have at least one of the above assets, if not several, and they might make up a pretty big portion of what you will leave behind. So what can go wrong?
Let’s say you have three children and three assets with about the same value – life insurance, your 401(k), and an IRA. You name your daughter Susan as beneficiary on your life insurance, your son George as beneficiary on your 401(k), and your other son Tim as beneficiary on your IRA.
Years go by. Your life changes, your assets change, and the law changes. What hasn’t changed? The beneficiary designations you put in place.
And after careful consideration, you decide you want everything going to Tim because he’s been caring for you for a long time. So you draft up an online will leaving everything to Tim.
Makes sense, right? Isn’t that what a Will is for? Naming the person you want to get all your stuff?
Yes, that is what a Will is for.
The problem is that beneficiary designations override your Will.
And it’s bad news bears if you want everything to go to the person named in your will but have different people named on your beneficiary-designated assets.
In this case, Tim would only get the IRA. Why? Because beneficiary designations override your Will. And because you never changed the beneficiary designations on your life insurance and 401(k), those assets will still go to Susan and George – even though the Will says everything should go to Tim.
And the IRA is only going to Tim because he’s listed as its beneficiary, not because he’s listed in the Will. In fact, in this scenario, NOTHING passes under your Will. Weird, huh? Having a Will in place that doesn’t actually distribute any of your stuff?
Here’s what you need to remember:
If your estate plan is centered around a Will or Trust, and your beneficiary-designated assets don’t jive with that will or trust, your assets will NOT be distributed the way you intended.
The first step to ensuring your stuff goes where you actually want it to go is to sit down with us at your Family Wealth Planning Session. We’ll go over the exact roadmap of what would happen to your estate today if something happened to you.
Schedule by calling our office at (317) 932-0363 or scheduling online right here.
Katie Charleston Law, A Professional Corporation
(317) 932-0363 – Work
A daily check-in call could be the lifeline, the joy you give someone that makes the biggest difference in their perception of what old age is like.
Contact me at 317-480-1038 today. Let’s make a difference together.
I’m Diana Beam, Founder of Keeping in Touch Solutions. It is my heartfelt desire for every person to live a happy and healthy life in the place they call home, no matter what their age. You can’t put a price on peace of mind for your parents and yourself. It’s priceless . . . and significant.
For that reason, the goal of every Keeping In Touch Solutions program is to provide a caring connection and service that both the elderly and their caregivers can rely on to make living that good life easier.
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