Do You Know Who Will Receive Your Retirement Accounts?
One effective way of avoiding probate is to make use of financial accounts that have a ‘pay-on-death’ feature. This feature, if used properly, allows you to avoid probate and distribute your assets directly to your heirs or loved ones as you designate. Upon your death, the beneficiary simply presents a death certificate to the financial institution and the assets can be paid directly to the beneficiary without having to incur the costs, or experience the delays, of probate administration. But when using these convenient devices, there is always one thing you must keep in mind:
Do you know who your beneficiaries are?
In one case, a son reviewed his late father’s affairs only to discover that his father had only one substantial asset: an IRA account. When reviewing the IRA account, the son discovered for the first time that he was not named as the beneficiary. Who had his father named as his beneficiary? The father’s ex-girlfriend. Worse yet, it was an ex-girlfriend the father had not seen, or had any contact with, for approximately 15 years. It was unlikely that his father wanted to leave this money to his ex-girlfriend and exclude his son but by failing to review his beneficiary designations, this is exactly what happened.
After considerable effort to locate the ex-girlfriend, things only got worse. The son explained to the ex-girlfriend that while she was the designated beneficiary, there were still outstanding bills that needed to be paid. The son also discussed the considerable time and effort he had expended (travelling to a distant city) to handle his father’s post-death affairs and how this account was his father’s only asset. After reviewing all these issues, the son assumed that the girlfriend would do the right thing and turn the money over to the son, so he would have some legacy from his father. Despite this plea, the ex-girlfriend’s response was simple and painful: “your father always wanted me to have that money.” Unfortunately, the son had nothing in writing to demonstrate she wrong and under these circumstances, California law presumes that the ex-girlfriend was the intended beneficiary.
Do you know who your beneficiaries are? If not, contact your financial institutions and see if your beneficiary designations reflect your current wishes. With just a little time and effort, you can save your beneficiaries substantial heartache.
Do you know who your beneficiaries are?
In one case, a son reviewed his late father’s affairs only to discover that his father had only one substantial asset: an IRA account. When reviewing the IRA account, the son discovered for the first time that he was not named as the beneficiary. Who had his father named as his beneficiary? The father’s ex-girlfriend. Worse yet, it was an ex-girlfriend the father had not seen, or had any contact with, for approximately 15 years. It was unlikely that his father wanted to leave this money to his ex-girlfriend and exclude his son but by failing to review his beneficiary designations, this is exactly what happened.
After considerable effort to locate the ex-girlfriend, things only got worse. The son explained to the ex-girlfriend that while she was the designated beneficiary, there were still outstanding bills that needed to be paid. The son also discussed the considerable time and effort he had expended (travelling to a distant city) to handle his father’s post-death affairs and how this account was his father’s only asset. After reviewing all these issues, the son assumed that the girlfriend would do the right thing and turn the money over to the son, so he would have some legacy from his father. Despite this plea, the ex-girlfriend’s response was simple and painful: “your father always wanted me to have that money.” Unfortunately, the son had nothing in writing to demonstrate she wrong and under these circumstances, California law presumes that the ex-girlfriend was the intended beneficiary.
Do you know who your beneficiaries are? If not, contact your financial institutions and see if your beneficiary designations reflect your current wishes. With just a little time and effort, you can save your beneficiaries substantial heartache.
