Beneficiary Designation Forms

by Dennison Keller

Close up of African American worker signing job contract, person being employed at new position, male client putting signature at document in office. Recruiting, promotion, legal documentation concept

As important as a will or trust can be to your estate plan, the most important document may be your beneficiary designation form. This is especially true for today’s seniors since so many people have much of their wealth tied up in 401Ks and IRAs.

Most clients do not realize that a beneficiary designation form will trump whatever language you may have included in your will or trust. After death, a will can only control the distributions of assets that: (1) you held in your name alone and (2) have no payable on death designations. Meanwhile, a trust can only control assets held in the trust’s name or payable on death to the trust. This means that your will or trust may state that you want your estate distributed evenly among your three children. But if your IRA or life insurance beneficiary form says that everything goes to one child, that child will inherit that entire asset, and the other two will be left out.

Clients routinely come to my office with a life insurance policy left to one of their children, or they jointly own a bank account with one child.  The senior may intend for that child to share the post-death payout with their siblings. But the beneficiary is under no legal obligation to do so- no matter what the will or trust says.

In addition, most people fill out their forms without thinking through what may happen if life – or death- does not go according to plan.  What happens if one of your children dies before you? You may intend that the deceased child’s share goes down to their own children (your grandchildren). But if your beneficiary form does not reflect those wishes, you may inadvertently disinherit this line of descendants.

Your should review your beneficiary designation forms along with your estate plan documents with a competent attorney every five years to make sure your assets are distributed according to your wishes.



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