Many California readers are familiar with the main documents used in estate planning. They are the will, the living will, the financial power of attorney and the health care power of attorney. Even if a person has what they believe is a legal, indisputable will, his or her heirs may not get assets intended for them. That is because the beneficiaries named in numerous financial documents have precedence over what is stated in the will.
Some people probably do not remember when they set up a checking, savings or brokerage account that they named beneficiaries of those funds. Even if they remember the process, they probably do not remember whom they named. Those people may no longer be alive or part of the owner’s life. Periodic review of named beneficiaries and all estate planning documents could be imperative for ensuring that the wishes of the owner are fulfilled at death.
The financial accounts that have named beneficiaries and override anything stated in a will include bank or brokerage accounts that are payable or transferable on death, annuities, life insurance and retirement accounts. The forms for naming these beneficiaries also include the percentage of the account each is to receive and even name contingent beneficiaries in case of death of a primary beneficiary.
As circumstances change with deaths, marriages and births, the named beneficiaries can be updated with a simple form, but the owner must take the initiative to research who has been named and make the appropriate changes. Many owners decide to include input from an attorney as they are preparing, reviewing and modifying their estate planning documents.
Source: MarketWatch, “Why an air-tight will can’t protect beneficiaries“, Robert Klein, September 09, 2014