You know who you are. You’ve been through a lot in your life and have seen our economy (and your life savings) go up and down over the decades. There’s a good chance that you have already prepared a Will and perhaps even a Revocable Living Trust. But how long ago did you sign these documents? Maybe you had young children back then, and now they’re all grown up and on their own. Maybe you are retired and you’re a grandma or grandpa now. What else has changed? Have you reviewed your documents recently to see if they even make sense anymore?
And you probably have some retirement accounts, like 401k accounts and IRAs, which may actually make up a large portion of your life savings. You may have annuities and life insurance policies, as well. All of these need beneficiary designations. Did you know that your beneficiary designations on these accounts and policies will govern where they go at your death, regardless of what your Will or Living Trust say? This is often overlooked when preparing estate planning documents and can have significant unintended, and often unwanted, results for your family.
► If you have failed to name a beneficiary, or if the person you have named as your beneficiary is not living at your death, your account or policy could end up as part of your probate estate, and, therefore, be subject to claims of your creditors and other heirs, not to mention estate income tax at high marginal rates.
► If your named beneficiary is disabled at the time your death, your family and the money could end up in guardianship court for your disabled beneficiary, which is extremely time-consuming, expensive and restrictive. Further, those funds that you had planned to have available to take care of your family member for the remainder of his or her life may, instead, have to be spent down at a very fast rate to almost nothing before the he or she can qualify for any governmental aid. With proper planning, the assets you are leaving for your disabled family member could be stretched out and used to supplement what he or she is otherwise entitled to receive as governmental benefits, you could significantly improve the quality of life for this special person.
► If you have divorced a spouse, or are no longer in contact with a certain individual, and this spouse or other individual is still named as a beneficiary on your accounts or insurance policies, they could end up with an unintended windfall, even if your carefully drafted Will or Living Trust specifically disinherits them.
► If you have named a trust as a beneficiary on a tax-deferred retirement account or annuity, the trust must include certain provisions in order to prevent accelerated payouts and income tax liability on the account.
Don’t let these undesirable, and completely avoidable, results become a reality for you and your family! If you have existing estate planning documents, we would be happy to review them, as well as your beneficiary designations, to be sure that your estate plan will work as you intend. And if you have just never gotten around to doing that Will or Living Trust, and decide it’s finally time to get started, we will work through all of these issues, and more, with you to create a comprehensive estate plan to accomplish your goals. Please contact our office at (847) 253-8800 if you would like to schedule a no-charge initial consultation with one of our experienced estate planning attorneys.
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law, Collaborative Divorce & Mediation.
This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.