Beneficiary Designations

Friday, July 15, 2011

Recent Press Coverage of Estate Planning (July 15, 2011)

Saabira Chaudhuri of the Wall Street Journal wrote two articles about the importance of keeping your heirs aware of key documents, and where the documents can be found. Chaudhuri points out that some insurance companies are failing to pay out life insurance policies because the company may not be obligated to determine if a policyholder is alive, they simply pay a claim when beneficiaries come forward. The articles lists 25 key documents that your heirs should be able to find quickly after you die, and a follow-up article lists several more. See The 25 Documents You Need Before You Die (July 2, 2011) and Read This Before You Die (July 7, 2011).

Caren Chesler of Private Wealth reports that wealthy Americans are leaving more of their wealth to charities and less to their children. Reasons for the trend, according to a survey by U.S. Trust, include that parents believe their children won’t be able to handle an inheritance, that their children will become lazy, that their children will make poor decisions, and that their children would be taken advantage of by outsiders. See Tough Love (July 2011).

Arden Dale of the Wall Street Journal points out that some states are repealing state estate taxes, some are hiking state estate taxes, and some states don’t have an estate tax. It leads to a lot of confusion, particularly for families that have residences in more than one state. See State Estate Tax Changes Make Plans Trickier (July 8, 2011).

Carolyn T. Geer of the Wall Street Journal stresses the importance of properly filling out beneficiary designation forms and discusses what types of financial accounts usually have beneficiary designations, who can be named as a beneficiary, and who should not be named as a beneficiary, among other issues. See Beware the Beneficiary Form (July 6, 2011).

Tuesday, March 22, 2011

NEET Tips

NEET Tips answers questions posed online to the NEET website

Can beneficiary designations be overruled by a new will?

No, properly completed beneficiary designations always override a previous or subsequently written will because beneficiary designations are part of a contract between the financial institution and the account owner. A will, on the other hand, is not a contract and may not override beneficiary designations. This was recently reaffirmed in a Supreme Court case, Kennedy v. Plan Administrator for DuPont Savings and Investment Plan. In this case, the Supreme Court unanimously ruled that the failure of an account owner to update a beneficiary designation after his divorce meant that his pension plan passed to his ex-wife, not his daughter, even though the ex-wife had agreed in the divorce decree to forfeit all right, title, interest and claim to the husband’s pension plan. Because the pension plan named the wife as primary beneficiary at the time of the husband’s death, the wife received the pension sum.

For more information on Beneficiary Designations, see the articles:

Why Beneficiary Designations are So Important

Beneficiary Designations Are the Final Word

Thursday, March 03, 2011

NEET Tips

NEET Tips answers questions posed online to the NEET website

Is a life insurance policy that has a beneficiary designation part of one’s probate estate?

If a life insurance policy has a proper beneficiary designation, and the beneficiary is alive to receive the proceeds, then the life insurance proceeds should not be part of the Vermont probate estate. Proceeds from life insurance policies pass via contract, which supersedes the provisions of a will.

Keep in mind that one’s probate estate is different from one’s taxable estate. Proceeds from life insurance policies are usually included in the decedent’s taxable estate, unless the policy is owned by an irrevocable life insurance trust (ILIT).

For more information on life insurance and beneficiary designations in estate planning, see the NEET articles:

Uses of Life Insurance in Estate Planning

Doubling Life Insurance Proceeds With an ILIT

Beneficiary Designations Are the Final Word

Friday, January 28, 2011

Press Coverage of Estate Planning this Week (January 28, 2011)

Deborah L. Jacobs of Forbes reviews new tax breaks, portability provisions and when trusts make sense under the new estate planning laws passed in December. See Married, With Assets (Jan. 27, 2011).

Joseph A. Giannone of Reuters points out that the rich have a rare opportunity to pass along millions of dollars to their children because of the re-uniting of the gift tax with the estate tax exemption level. But the current law expires at the end of 2012, so the opportunity may not last long. See U.S. Rich Get 2-Year Window on Gifts to Heirs (Jan. 27, 2011).

Ashlea Eberling of Forbes discusses how to go about writing your first estate plan, covering basic wills, advance directives, naming a guardian, beneficiary designations, and considerations for business owners. See How to Write Your First Estate Plan (Jan. 26, 2011).

Friday, January 07, 2011

Press Coverage of Estate Planning this Week (January 7, 2011)

Deborah L. Jacobs of Forbes discusses the new portability provisions included in the tax law passed by Congress in December, and asks if portability eliminates the need for trusts. She then provides several situations where trusts still make sense, and others where relying on portability alone may suffice. See Planning for a Disappearing Estate Tax Break (Jan. 3, 2011).

Ashlea Ebeling of Forbes argues there is no longer any excuse to put off estate planning, and suggests four steps to take soon: write a will, complete a financial power of attorney, complete a health care advance directive, and review the beneficiary designations on your life insurance policies and retirement accounts. See No Excuse For No Estate Plan (Jan. 3, 2011).

Wednesday, December 15, 2010

NEET Tips

NEET Tips answers questions posed online to the NEET website.

Do the provisions of a will override a beneficiary designation?

No, rather a beneficiary designation overrides the provisions in your will. The reason is that your beneficiary designations form part of a contract that you have with the financial institution managing the account, and contractual provisions overrule language included in a will. For this reason, it is advisable to check every couple years to ensure all of the beneficiary designations on your financial accounts, including retirement accounts and life insurance policies, are up to date and reflect your current wishes. Also, if you are recently divorced or widowed, update your beneficiary designations immediately. It frequently happens that former spouses receive life insurance proceeds, to the dismay of current spouses.

See the articles:

Why Beneficiary Designations Are So Important; and

Beneficiary Designations Are the Final Word

Friday, August 13, 2010

Press Coverage of Estate Planning this Week (August 13, 2010)

Chuck Jaffe of Marketwatch discusses conversations with his late brother, who advised that people should get their estate planning affairs in order so that they can focus on more meaningful issues when death is near. The brother, who contracted an illness and died 46 days later, suggested that talking about estate planning with an attorney when everyone is healthy is easy, talking about death when one is dying would be unimaginable. See 46 Days to Live: What’s Your Plan? (Aug. 2, 2010).

Floyd Norris of the New York Times recounts how the Bush tax cuts of 2001 came into being, and how politics will affect whether the estate tax comes back in 2011 at a threshold of $1 million. Congressional factions, even more partisan now than in 2001, remain in no mood to compromise, and a return to the $1 million estate tax threshold and higher tax rates appears increasingly likely. See Taxes No Longer So Certain (Aug. 12, 2010).

Pamela Yip of the Dallas Morning News points out that estate planning is not just for the rich. She states that everyone should have a will, and reviews some common estate plan mistakes that people make, including not knowing the value of everything you own, failing to update your plan, leaving everything to your spouse, over-relying on joint tenancy, and picking the wrong people as executors and trustees. See Estate Planning Lets Your Will Rule After You’re Gone (Aug. 6, 2010).

Jeffrey McKenna, Esq., writes in the Lincoln County Record that almost always a financial account that has a beneficiary designation will overrule provisions in a will that would have the account pass to someone other than the listed designated beneficiary. Beneficiary designations are common on life insurance, annuities, and IRAs, all of which are contracts. The associated beneficiary designations are a part of the contract, and a provision in a will cannot change the contract. Reviewing your beneficiary designations every couple of years on these and other accounts is essential to ensure your estate plan works the way you intended it to. See What Controls: The Will or “The Box” (Aug. 13, 2010).

Irving Blackman, Esq., writes in ContractorMag.com, about the estate planning issues that arise when a client is planning for second or third marriages. Types of issues that are prevalent include age differences between the new spouses, health issues, kids from prior marriages, lack of a premarital agreement, and how to provide for the surviving spouse without disinheriting your children. See Estate Planning for Second, Third Marriages, Etc. (Aug. 9, 2010).

Friday, September 04, 2009

Press Coverage of Estate Planning This Week (September 4, 2009)

Kate Ashford of CBS MoneyWatch.com wrote three articles addressing getting your finances and estate planning in order, what questions to ask your parents about their estate planning, and what steps are necessary when a loved one passes away.  See Keep the Money in the Family (Sept. 2, 2009).

Heidi Brown of Forbes.com writes about several areas of estate planning, including planning for minors, planning gifts for charities or family members, ensuring your medical wishes are known, and ensuring beneficiary designations are up to date, particularly if your marriage is ending.  See Your Go-To Guide to Estate Planning (Sept. 2, 2009).

Barbara Kate Repa of Caring.com covers some of the basic provisions that you should consider including in your will, such as naming an executor, specifying beneficiaries and alternate beneficiaries, how taxes should be paid, and providing for pets.  See Aging and Caring: 10 Things to Consider Including in a Will (Sept. 2, 2009).

Mark Kanny of the Tribune Review (Pittsburgh, Pa) reviews a recent book on blended families – where one or both spouses has children from a prior marriage – and highlights some of the major issues that tend to arise.  See How to Estate-Plan Your Blended Family (Aug. 31, 2009).

Kelly Greene of the Wall Street Journal discusses naming a trust as a beneficiary of an IRA, including some of the benefits and drawbacks, and what to avoid.  See Trust as Beneficiary of IRA is a Popular Strategy (Aug. 29, 2009).

Friday, July 10, 2009

Press Coverage of Estate Planning This Week (July 10, 2009)

Kevin Bourke writes in the Santa Barbara (Calif.) Independent that failure to update your beneficiary designations on financial accounts such as IRAs can lead to surprise endings, like long-divorced ex-wives receiving sizable retirement plans while the children get nothing.  See Accidentally Disinherited (July 7, 2009).

Harriet Johnson Brackey of the South Florida Sun-Sentinal discusses arranging for guardianship of minor children in complex family arrangements, as well as providing some tips to strengthen the chances a court will abide by your wishes.  See Got a Will?  Better Make Sure Who Gets the Kids (July 10, 2009).

Jane Bennet Clark of Kiplinger's Magazine contends Michael Jackson had his estate plan in order, at least more so than most Americans.  She offers some general advice on what should be included in an estate plan.  See 4 Estate-Planning Lessons From Michael Jackson (July 2009).

Karin Grablin writes in the Bradenton (Fla.) Herald that soon after divorce it is important to review your estate and financial planning.  Issues include planning for blended families if you remarry, and guardianship of minor children, among others.  See Make Estate and Financial Planning First Step After Divorce (July 7, 2009).

Candice Choi of BusinessWeek provides a brief overview of the differences between wills and trusts, and some of the advantages of choosing one over the other.  See Will or Trust? Understanding the Differences (July 3, 2009).

Sarah Arnquist of the New York Times discusses planning for funeral arrangements and the options available to avoid the expense of a full-fledged funeral, including cremation and home funerals.  See The Caregiver's Last Expense (July 8, 2009).