Have you updated your beneficiary designations?

Estate Planning

July 30, 2020

At Worden Thane, we can help you with crafting your estate plan.

We help you make the important decisions and develop a plan that is right for you and your loved ones. However, your work does not stop there.

We’ve talked about the importance of beneficiary designations before. We think it is so important, that we want to dedicate another blog post about it! A beneficiary designation is a non-probate tool you can use to pass an asset directly to a loved one. For example, you can name your child as a beneficiary on your bank account. Upon your death, that child will then receive your bank account automatically and without the need to file for probate in order for your child to receive the funds from that account. Probates are sometimes necessary, but other times it is appropriate to pass your assets to your loved ones through beneficiary designations.

Many assets you own can have a beneficiary designation. In Montana, you can record a transfer-on-death deed designating a certain beneficiary or beneficiaries to receive your real property upon your death. Also in Montana, you can designate a beneficiary for your business interests. You can designate beneficiaries for all your financial assets: bank accounts, investment accounts, retirement accounts, and life insurance.

Your attorney can help you with beneficiary designations. There are a few beneficiary designations we can do for you, such as recording a transfer on death deed for your real property and registering a transfer on death beneficiary for your business interests. Attorneys usually can’t update your beneficiary designations on your financial accounts but we can help you navigate that process and ensure the beneficiaries you name are correct. Each financial institution has their own beneficiary designation form that you will need to complete and return back to the financial institution; we are happy to help you review and complete the forms.

We can’t stress enough how important it is to update and regularly review your beneficiary designations. Because beneficiary designations are non-probate transfers, they take priority over devices in your Last Will and Testament. For example, if your bank account lists Child A as the sole beneficiary, but you devise your entire estate to Child B in your Last Will and Testament, the bank account will go to Child A even though your Will lists Child B to receive all of your assets.

Even though your entire estate can pass through non-probate transfers such as beneficiary designations, joint tenancy, and trusts, you should consult an attorney to make sure using non-probate transfers is appropriate for your estate.  Even if you use non-probate transfer tools, we recommend you also execute a Last Will and Testament. Your Will may never need to be probated in court if you have successfully set up your estate to pass via non-probate transfers. As life goes on, you might obtain new assets and forget to set up a beneficiary designation. Or your designated beneficiary may predecease you. In these cases, your executed Last Will and Testament serves as a back-up to your beneficiary designations in case the designations fail for whatever reason.

Contact our estate planning attorneys to learn more, or for assistance in reviewing and updating your titles and beneficiary designations. 

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