Update Your Beneficiary Designations – NOW!

Aretha Franklin Died Without A Will

How do we know? Simple because ANYONE can go down to the probate office and find out what’s going on.

In this case, presumably the crack investigative journalists at the Detroit Free Press went down to the probate courts and found...”her four sons filed a document Tuesday afternoon listing themselves as interested parties in her estate. One document filed with the court and signed by her son Kecalf Franklin, and her estate attorney, David Bennett, check a box acknowledging the absence of a will.”

No Will or Trust

You can read the article here if you so choose.

The article goes on to state “the finances of an intensely private Aretha Franklin soon will become very public in Oakland County Probate Court because she left no will or trust.”

The funny thing about that statement though is that a WILL won’t solve the issue of an estate becoming ‘very public’ either.

Probate Court

Probate court is nothing more than the public proving of a Will.  The emphasis there on PUBLIC.  So, a Will or not, probate court will get involved and thus this will become public.

Dying without a Will is called Intestate by the way.  Which means the probate court will have at it to dictate the disposition of your assets.  Hopefully, there won’t be children who need guardianship! I talk about this situation and how it may have affected my family in my book “Strategic Money Planning” which you can get here.  In fact, you can get this book for FREE on regular Kindle for the next day or so.  After that it’s all of $4.49.

Get A Will!

So what do you need to do? Well, make sure you at least have a Will!  In fact, in my video here, I go over estate planning basics and the minimal documents you need.  Now, be advised, I do not recommend simply using LegalZoom.  You need to get a real person to draw up your documents.  A real attorney who knows estate planning.

Yes, it will cost you a couple hundred dollars, or more. But folks, this is not just a form you take to the bank for a quick transaction, your life is wrapped up in this document(s). You have got to make sure it’s done correctly.  Even if costs you more money than doing it via computer program.

I leave you with these questions. When did you get your Will drawn up?  Has anything changed since then? How is your executor/executrix? Who is your attorney in fact?  What kind of Power of Attorney do you have? Do you have a Living Will? Do you have a Medical Directive?  Do you have a Trust? Is it funded?

So much to consider. But you need to do it, every few years too.

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Beneficiary Designations may be the most important aspect to ANY inheritance plan. Who gets your money when you die? I talk about this a lot in fact. Here, here and in other articles throughout my blog, like here.

So, it goes without saying that I am a beneficiary designation fiend.  It’s absolutely inexplicable to have not put designated beneficiaries on your IRAs, 401ks, 403Bs, annuities, life insurance etc.  In fact, you can put name designated beneficiaries on your bank accounts via a Payable On Death (POD) arrangement or your brokerage accounts via a Transfer on Death (TOD) arrangement.

The only reason you would not want to do this is, well, I don’t know. I suppose, maybe, you have a Will and want your Will to dictate terms of your assets upon your death.  By not naming beneficiaries your assets will go immediately to Probate Court where your Will will decide the disposition.

But why put your beneficiaries through that?  Just name them outright for Heaven’s sake!

I’m sure there are examples in which you should not name beneficiaries.  Let’s say that represents 5% of the population.  For the other 95% then what’s your excuse?

I’m going to share with you three REAL WORLD examples I just learned about from a webinar I attended how beneficiary designation mistakes cost people HUGE!

Widower Is Disinherited From Wife’s $900k+ Retirement Account

First, here is a case where a man married to his wife for nearly 20 years was disinherited from her nearly $1 million retirement account because she had named her sister beneficiary 4 years before she married!  24 years after naming her sister beneficiary she dies and guess who gets the money? The sister did!  Rightly or wrongly, if the decedent wanted her husband to get her money she should have just updated her beneficiary forms.

Children Disinherited From Dad’s Retirement Account By Dad’s Second Wife

Secondly, here are two widows. Each was married less than a year to their respective husbands when those husbands died.  One widow is denied survivor benefits under the ruling that because she wasn’t married for a year the company was not obligated to give her benefits.

Wife Not Eligible To Receive Husbands Retirement Benefits Because Married Less Than One Year

The other widow was granted benefits, overriding the beneficiary form the decedent had filled out naming his kids as beneficiaries!  Why? Because the court in this case said that because the company SPECIFICALLY doesn’t state in its retirement plan document that marriages MUST be over a year for the surviving spouse to receive the benefits, the surviving spouse MUST receive the benefits, even if the decedent named his kids!  Does this make any sense? Of course not. Yet, there it is. In black and white.  This is insanity!

Decedents Daughter Disinherited In Favor of Decedent’s Divorced Spouse

In this case, it’s a pretty open and shut case.  Husband named his wife beneficiary of his retirement account. Husband and wife divorce.  Husband does not change beneficiary designations and subsequently dies.  Plan pays out benefits to husband’s divorced wife, even though daughter of husband was still alive.

Daughter sues and loses due to the fact that the ex-wife was still named as  beneficiary.   Really nothing unusual about this one. Don’t want your ex to get your money, update your beneficiary designations.

Jointly-Owned Property Beneficiary Blues

This one actually affected my own family.  Husband and wife married for many years.  Husband dies early when kids were still tots.  Wife dies many years later when kids are grown and scattered throughout the country. One of the daughters named executrix needs to settle the estate.

Takes wife’s (her mom’s) death certificate to probate court to confirm she is deceased.  Needs probate court to grant her letters of authorization to settle the estate.  But probate court won’t proceed with the moving of jointly owned assets because while they can confirm the death certificate of the wife, how about the husband? Probate court requests copy of death certificate on husband(dad).

Well, he died 2 decades before when executrix was a young child. Executrix has no clue where that paperwork would be.

After many weeks of aggravation, constant paperwork shuffling and of course, fees,  the estate is finally settled. But that is time that is lost due to the unnecessary burden of the Jointly-Owned Property Blues.

When owner of a jointly-owned property dies, it’s time to revisit the ownership titling of those assets. It will make it MUCH easier on the person you want to settle your estate.

Moral of the story. Understand your beneficiary designations…and your account titling.  Think about it. Don’t just look at the statement in the mail and throw it aside and say to yourself “looks good.” Does it? What could possibly go wrong?

Well, as we’ve seen in the soap opera above, many, many things could.
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