Owners of insurance policies, accounts, real estate and all other assets must understand that a beneficiary designation will supersede a written will or trust. For example, if a will states that all assets will be divided between three children but there is a TOD on a bank account to one child, that child receives the entire account and the other two go without. It is for this reason that a thorough estate plan not only prepares a will or a trust but looks at all assets and all beneficiary designations. Problems arise if the owner fails to update beneficiary designations or a beneficiary predeceases an owner or there is a divorce or numerous other issues. It becomes more complicated when individuals designate a minor child or former spouse as a beneficiary. Planning for retirement designations accounts like IRA’s or 401(k)’s is even more difficult and complex. Beneficiary designations, without a comprehensive plan, are dangerous and often result in unnecessary family fights and litigation. Do not think of beneficiary designations as an estate plan but only one tool to use in a well planned estate.
Remember that an estate plan will be employed to distribute all of the assets left after your decades of hard work, paying taxes, paying bills, and raising a family. This is not the time for amateurs or the Internet. Remember that the Internet is not a magic box that creates documents. There is someone at the other end of the website, likely with no training and likely unlicensed, who is putting the documents together. An estate plan is not just documents; it is a “plan” of how to handle your assets and your family if you are alive but incapacitated and upon death. At Checkett & Pauly you do not just get forms but the following services:
· Consultation with an attorney
· Draft of documents with full outline and glossary of terms.
· Second Consultation with an attorney
· Preparation of final documents
· Preparation and verification of deeds and legal descriptions
· Final consultation with third explanation of estate plan and all forms
· Your estate plan is stored remotely so that it is available to your family at any time.
· Receipt of full summary of estate plan so that you can quickly and easily see how everything works.
· Checkett & Pauly files deeds and makes all real estate transactions
· Preparation of directions and letters for your stock broker
· Preparation of directions and letters for your bank
Checkett & Pauly is in its third generation. The fourth generation of attorneys has recently started. There will be attorneys at Checkett & Pauly to help your family for many decades to come. Can anyone on the Internet say that?
The death of any close family or friend is always a traumatic time. However, once there has been a proper funeral and burial you must attend to certain legal and financial matters, such as:
· Contact estate planning attorney
· Notify Social Security Administration
· Obtain copies of life insurance policies
· Notify credit card companies
· Notify pension or IRA plan administrators
· Review jointly owned assets
· Speak with attorney about publishing notice to creditors in local newspaper
· File federal and state estate tax returns within nine months of death
· Obtain certified copy of death certificate
· Direct an estate planning attorney to file Last Will and Testamen with the probate court
· Notify tax preparer
· Identify assets and their value effective date of death
· File and prepare last income tax returns
· Review beneficiary designations with estate planning attorney
· Review current insurance policies and future insurance needs
· Review inherited IRA and possible alternatives
· Update your own estate plan
There is more to estate planning than wills and trusts. Of important significance is the death beneficiaries on life insurance policies, annuities, IRA’s, pension plans, and certificates of deposit, just to name a few. A will that leaves everything to a surviving spouse serves no purpose if the death beneficiary on an IRA is an ex-spouse, a child, or someone important to you at a prior time in life. People often name a beneficiary on their life insurance at work and never again look at it or make a change. It is not unusual to find that when someone dies an ex-spouse is named as death beneficiary on company life insurance or on a 401(k). It is for this reason that at Checkett & Pauly we think of estate planning not just creating documents but guidance and consultation. Be sure to update your beneficiary designations on the birth or death of a child, the death of a prior beneficiary, the death of a spouse, marriage ending in divorce, or at least every three years. Beneficiary designations are inexpensive and easy but often have substantial and unintended consequences to your estate plan.
Many people avoid talking about estate planning because they do not want to talk about death. However, it is important to understand that estate planning isn’t just about death; it is a plan to handle your personal and medical affairs when you are alive but unable to act. A comprehensive and well thought out estate plan not only takes care of what happens when (not if) you die, but also tackles the issue of handling your lifetime affairs when you are unable to do so. A financial power of attorney coupled together with medical directives is an effective way to resolve these issues. These documents are also the best way to avoid a court ordered guardianship. Failure to plan for old age and incapacity hurts not only you but your family and loved ones.
Living wills are often called medical directives or may be part of a healthcare power of attorney. A living will is also a close relative of a Do Not Resuscitate Order. Twenty-five years ago the idea of a living will or advance directive was quite controversial. However, in this day and age almost every estate planning client who comes to Checkett & Pauly wants to be sure there will be no heroic medical procedures when they are clinically dead with no chance for recovery. It is important that you have a well drafted and comprehensive living will. In our experience the living will forms that are given out by hospitals and over the Internet are a poor substitute for what really needs to take place in a time of emergency. Your family and physicians must know your wishes. A living will coupled with a healthcare directive is a straight forward document that will save you and your family both heartache and thousands of dollars.