Updated: Jun 30
A comprehensive and effective estate plan involves more than simply making a will. As part of your estate plan, we ask clients to review the accounts that have beneficiaries listed, such as 401(k)s, pensions, and savings accounts, and ensure they have listed a beneficiary for each of these.
You can change whom you listed as a beneficiary as your relationships and circumstances evolve. When you designate a beneficiary on an asset such as an account, they assume ownership only after you die. Generally, they will not have an ownership interest while you are alive and can handle your own affairs.
These assets pass to your beneficiaries without probate. That means that your beneficiaries will receive a check directly issued to them upon your passing, even if you have other property or assets that must go through probate. If you name one or more beneficiaries on these accounts, the funds will go directly to them.
If you have any of the following, check to ensure you have the person or persons you want to receive the assets listed as beneficiaries.
Retirement accounts – Such as IRAs, Roth IRAs, and other similar types of retirement accounts.
Annuities – Annuities provide regular payments to individuals over a specified period of time. Most plans allow you to select one or multiple beneficiaries.
Pension Plans – If you pass away before retirement, some pension plans provide lump-sum payments to named surviving loved ones.
Bank accounts – Pay-on-death or transfer-on-death bank accounts allow you to list beneficiaries who assume ownership of your account after you pass away. This is different from a joint account, where you and another person both own the assets. In a pay-on-death account, your beneficiary takes ownership after you pass. You can add and change beneficiaries directly through your financial institution.
Investment accounts – Like other financial accounts, investment accounts can be
transferred to a recipient upon the owner’s death.
Health savings accounts – You can obtain the necessary form to transfer your health savings account by contacting your HSA provider or visiting their website.
Life insurance policies – Those with life insurance policies typically select who will receive the payment when they establish their policy. However, policyholders should remember to review and update their plans when circumstances change, such as after a divorce or death.
Review your home deed as well. You can have a specific type of deed prepared to transfer your house upon your death and bypass probate. For older adults, this can be a safer option than adding someone to the deed, as it preserves their full ownership of the property until death.
Business Interests – If you own a business, be sure to review partnership agreements, shareholder agreements, or operating agreements for transfer provisions.
In many cases, you may name more than one beneficiary. For instance, a person with two children might want to leave an asset to them both. Depending on the type of asset, you can state how much of the asset each child receives.
Organizing your assets and creating a plan does not have to be difficult. Without much time and effort, you can develop a solid plan to distribute your assets to your loved ones according to your wishes.