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Do You Know Where Your Assets Are Going? by Lesly Longa Vaillancourt

Do You Know Where Your Assets Are Going? by Lesly Longa Vaillancourt

My job as an estate planning attorney is to find the simplest way to transfer a client’s’ assets at death.  Many times, that depends on the nature of the asset and the circumstances of the particular client and beneficiaries.  As part of the estate planning process with Longa Law, I will discuss with you who or what should be the designated beneficiaries of your financial accounts and life insurance.

Properly completed beneficiary designation forms are an important part of your estate plan. Beneficiary designations allow a person to designate a beneficiary to receive certain types of assets when they pass without giving an ownership or beneficial interest in the asset during their life.  For instance, if you have a revocable living trust, you may want to make sure you “fund the trust” by designating the trust as the beneficiary of your financial assets.  If you do not have a trust that can serve as a one-and-done beneficiary, then don’t forget to name contingent beneficiaries as well as a primary beneficiary.  For accounts that can but do not have a beneficiary listed, when the owner passes away, the asset will go through a probate administration to heirs as determined by law or set out by a valid last will and testament.  Probate generally costs about 5-6% of the total value of the estate, which is why most of my clients use a revocable living trust to avoid a probate administration.

In summary, a beneficiary designation will:

Transfer property outside of a probate administration;
Delay a beneficiary’s ownership or access to an asset until after the owner’s death;
Avoid direct ownership by a beneficiary by passing ownership directly to your trust.

Common assets that pass by beneficiary designation include:

Life insurance policies;
Retirement plans;
Employee stock purchase plans;
Deferred compensation plans;
Health savings accounts;
Stock options.

Beneficiary designation forms generally trump the provisions of your estate planning documents, including a last will or a revocable living trust.

A properly completed beneficiary designation form may serve to protect your assets from creditors upon death. When choosing beneficiaries you may want to consider the effect the designation will have on the beneficiaries’ eligibility for government benefits and the age of the beneficiaries. For minors or disabled beneficiaries, creation of a revocable living trust or testamentary irrevocable trust for the benefit of the beneficiary will allow you to name the trust as the beneficiary of the designated asset. It is also important to update beneficiary designations after second or later marriages for yourself or your children.

If you are unsure who or what should be listed as your designated beneficiary, or if you are unsure if your last estate plan fits your current needs, please schedule a consultation with me using my calendar linked HERE.