Supernatural Influences of Estate Planning

Financial PlanningPosted on September 21st, 2016No Comments

Written By: Zach Bennedsen, CFP®

ghost-moneyWith Halloween just around the corner, you may find yourself watching one of the many “reality” TV shows centered on hunting down supernatural influences. Whether or not you believe in the supernatural, one could argue that there is a tangible way for those who have passed to have an influence on the world of the living. Put away your proton pack; we’re not busting any ghosts here, we’re talking about estate planning.  While it may not be as personal as a ghostly apparition, you can still help the ones you love, even when you’re not around, by electing beneficiary designations.

Some of your assets will pass via your will and/or Revocable Living Trust. But many assets pass by contract or law.  One such way this happens is via beneficiary designations.

For an asset to pass by contract, the beneficiary designation must be set up officially on the respective account or insurance policy.  This is done when the account is set up, and can generally be changed at any time. A good example of where a beneficiary designation is used is with an Individual Retirement Account. To open the IRA, you must designate at least one primary beneficiary to whom the account is passed upon your death. It’s important to note that the beneficiaries listed in the account documents hold power over any other bequest you may try to make in regards to that account. For example, if your will bequeaths your IRA to your daughter, but the account itself lists your husband as the primary beneficiary, the assets will pass, by contract, to your husband. Furthermore, most accounts only require primary beneficiary information. What happens if your primary beneficiary isn’t around when the assets are set to be passed? Hopefully, you’ve also elected contingent beneficiaries to prepare for such an event and/or designated your primary beneficiary in such a way that it will go to their heirs if they have predeceased you.   If the primary beneficiary is not living and no contingents are elected, the state will step in to decide where the asset passes. This same information about beneficiaries applies to insurance policies and “Transfer on Death” accounts.

As mentioned previously, other assets can pass by law. Assets generally have an ownership type associated with them. That ownership type will determine where and how the asset passes. For example, if an asset is owned “Joint Tenancy with Rights of Survivorship”, it will automatically pass to the other joint tenant upon the first death.

Of course, depending on how many accounts and documents you have, it can be a handful to keep track of them all. At Yeske Buie, we help ensure your beneficiaries and ownership designations are established correctly, both initially and on an ongoing basis.  And we post this information to your Client Private Page®. In preparation for your annual meeting with us, we also ask that you send us any updated information, and we appreciate being in the loop with your attorney as you are considering making changes to your estate documents. You may also send us the information anytime throughout the year as it is updated and we will be sure to update your report.

Keeping your beneficiary designations up to date will never make for exciting TV, but it does have a huge effect on your loved ones. Even when you can no longer be around, a proper estate plan is your best bet to have your wishes carried out. If the ghost hunters really want to see influence from beyond the grave, maybe all they need to do is set foot inside a Financial Planner’s office.

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