Beware the Beneficiary Form (Part 4 of 4)

HNW Elder Law, Estate Administration and Probate, Estate Planning, Will Contest and Probate Litigation

This is the fourth and final article about beneficiary designation and NJ probate and estate planning.

For non-retirement assets with beneficiaries correctly titled, your assets and savings typically flow into your estate upon death and are distributed according to your will or trust, assuming you have one.

For retirement assets, it’s not as simple.  Without a beneficiary designation the funds will be distributed according to your administrator’s plan document, for example:  to your spouse if you are married, or to your estate if you are not.  This can happen inadvertently if you don’t update beneficiary forms, especially if a beneficiary dies and you don’t name a contingent beneficiary.  (A contingent or second beneficiary is the person(s) or entity you want to get the proceeds of your accounts if the primary beneficiary predeceases you. There can be multiple contingent beneficiaries).

I recently read of a person, a widow, who died suddenly last year.  If the widow’s beneficiary designations had not been updated after her husband passed away, her $1 million IRA would have gone to her estate instead of directly to her children, triggering a big tax bill and preventing her children from stretching out the IRA distributions for at least a decade.

How can I ensure my goals will be honored?

Financial institutions merge.  Financial records are lost.  Keep records, including copies of all your beneficiary designation forms. Send them certified mail, return receipt requested.  Go online and create or change your beneficiary designation(s). Then check regularly, perhaps at tax time, to make sure that what your institution has on file is correct.  Don’t expect your bank, broker or IRA custodian to tell you if something is wrong or missing with your beneficiary designations.  Don’t assume anything.

For more information about beneficiary designations and estate planning, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

For further, information, please go to our helpful estate planning website, found at https://www.hnwlaw.com/elder-law/nj-wills-attorney/the-importance-of-beneficiary-designations-to-your-estate-plan/

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Estate Planning Attorney

 

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