When people in New York decide to plan for their future, they may think about creating wills, trusts and other estate documents. However, there are other concerns to keep in mind when planning an estate. In particular, one of the most important, yet often forgotten, parts of developing an estate plan is ensuring that beneficiary designations are correct and up to date. Many of the largest parts of an estate do not pass through the probate process or are even funneled through a trust. For example, bank accounts, investment accounts, 401(k)s and life insurance policies are often distributed to a specific beneficiary named by the account holder.
By naming a “payable on death” beneficiary, people can help their heirs avoid the time and expense of probate. However, it is important that people make sure that their beneficiary designations truly reflect their goals and current relationships. For example, many individuals divorce and even remarry without thinking about the need to update their beneficiary designations. As a result, an unexpected person can end up with a substantial sum. This can lead to ongoing conflicts that are far more costly and may end with unwanted results.
In other cases, people can help ensure a comprehensive estate plan by passing all their wealth to a trust, including naming the trust as the beneficiary. However, it is important to ensure the trust is correctly designated on these accounts. In addition, people considering passing on a qualified account, like an IRA, to a trust should consult an attorney to avoid costly problems.
People who are planning their estates can benefit from reviewing the beneficiary designations on all their relevant accounts. An estate planning attorney can help individuals draft documents like wills, trusts and powers of attorney and develop a plan to direct their assets.