Remember to Review Your Beneficiary Designations

A trust is a legal entity used to hold legal title to property. Trusts can provide many benefits such as probate avoidance, tax savings, and control over the administration of your property at death. Many people prefer using trusts as an estate planning method because it provides flexibility in the distribution of their estate. Although property held in a trust usually does not require probate, trusts are not the only way in which probate can be bypassed.

Some assets, including IRA’s, 401k’s, and life insurance policies, allow for a beneficiary to receive the asset automatically upon the death of the asset owner.  This is accomplished by filling out a beneficiary designation form for assets that allow these types of transfers.  Often, these types of assets are titled into the name of the trust, which leads some individuals to believe that the trust provisions will override the beneficiary designations. Similarly, many believe a will’s provisions will supersede any other document; this is not the case.  If there is conflict between your estate planning documents and your beneficiary designations, the beneficiary designation controls.  For instance, if, through your trust, you specifically devise a particular IRA to Bob, but Tom is the designated beneficiary of that particular IRA, Bob will receive the account.

Yahoo Finance recently shared a story about a man battling cancer who wanted his children to receive his retirement funds. He worked with advisors and attorneys to make sure this happened.  He created a will detailing his wishes, but sadly, he did not update his IRA beneficiary designation form correctly. As a result, his surviving spouse (whom he married two months prior to his passing) received $400,000.

As a general rule, it is a good idea to have your estate plan reviewed every couple of years to ensure the plan is current. It is also a good idea to review your beneficiary designations to ensure that they are in harmony with your estate plan. If you would like a comprehensive review of your estate, please contact Morris Hall for your free consultation.

Contributed by MH Phoenix Estate Planning Attorney Darren L. Richardson.

About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.  We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.