We often discuss the importance of estate planning, and many of you have diligently worked with your attorneys to create comprehensive plans. A core component of these plans is your will, and your living (revocable) trust if you have one. These are crucial documents that reflect how you want your assets distributed. However, this is only one piece of the puzzle.
It’s important to ask yourself: have you implemented all the necessary steps outlined by your legal counsel? Simply signing a will is rarely sufficient to ensure your estate is handled according to your intentions. Your attorney likely provided a set of instructions detailing specific actions required for your plan to be fully effective. Have you shared this with us?
These instructions often include critical tasks such as:
- Asset Titling: How your assets are titled plays a significant role in how they are transferred upon your death. (Titling refers to the legal ownership of your assets). Are your bank accounts, investment portfolios, and real estate titled in accordance with your estate plan? Incorrect titling can lead to unintended consequences and potential probate issues. (Probate is the court-supervised legal process of validating a will and distributing assets.)
- Beneficiary Designations: Reviewing and updating beneficiary designations is essential. This is especially true for assets like IRAs, 401(k)s, and life insurance policies. These assets typically pass directly to the designated beneficiaries, bypassing the provisions of your will. Additionally, you and your attorney may have considered utilizing transfer on death (TOD) or payable on death (POD) designations on other applicable accounts to facilitate direct transfer to beneficiaries. Making sure these designations align with your overall estate plan is very important.
Why are these steps so crucial?
- Avoiding Probate: Proper asset titling and beneficiary designations can often help avoid or streamline the probate process, saving your heirs time and money.
- Ensuring Your Wishes Are Followed: Incorrect titling or outdated beneficiary designations can lead to assets passing to unintended recipients, contradicting your estate plan.
- Tax Implications: Asset titling and beneficiary designations can also have significant tax implications for your estate and your beneficiaries.
Why also are regular reviews of these instructions important?
- Your heirs may have changed: New family members, death, divorce, preferred charities, or the creation of trusts might necessitate changes in your beneficiary information.
- Your assets may be different: Perhaps you have another home, a new retirement plan or an inheritance. These should be addressed in your plan so that your wishes are followed.
- The laws change: New Congresses, presidential administrations and state budgets tend to produce changes in inheritance rules and tax laws. Your former estate plan may need to be amended to take these into account.
Here’s how we can help you. If you have the instructions your attorney gave you, you can share these with us. If you don’t know where these instructions are, you can ask your attorney to let us speak with him to get this important information for you. We can review them together and if you believe that these best fit your wishes and your current circumstances, we can update your account titling information and your named beneficiaries on the accounts we manage for you. Further, we can also point you in the right direction to address this with your retirement plan provider, life insurance company and others.
We encourage you to review the instructions provided by your attorney, to make sure these reflect your wishes and current circumstances and confirm that you have taken all necessary steps to implement your estate plan. If you have any questions or require assistance in reviewing your account titles and beneficiary information, please call us at (402) 991-3388. Let us help you set these up according to your desires.
Disclaimer: This article is for informational purposes only and does not constitute personalized legal or financial advice. Consult with a qualified financial advisor before making any investment decisions and a knowledgeable attorney before adopting any estate plan.
Eric Ball, CFA
Managing Director & Chief Investment Officer
America First Investment Advisors, LLC
Omaha, Nebraska
This post expresses the views of the author as of the date of publication. America First Investment Advisors has no obligation to update the information in it. Be aware that past performance is no indication of future performance, and that wherever there is the potential for profit there is also the possibility of loss.
