This week while watching the news we were surprised to hear that Aretha Franklin had died without a will. It’s hard to believe that even the rich and famous with all of the resources and access to advice that they have can make such a mistake. However, it may not be too bad for her heirs if she had a trust set up and beneficiaries on all of her accounts.
More than likely her estate will have to go through the probate process opening up the a possibility of claims against her estate from outside individuals. Also there is a mistaken belief that having a will allows you to avoid probate. A will tells the court what you wish to happen but your estate still goes through the probate process.
All of us have busy lives taken up by work, children and activities that we like to do for fun. With all of the busyness in our lives, it can be difficult to stop and look at the big picture of where we are and what we have accomplished. As part of that reflection we should all also look at protecting and passing along our legacies.
What are some things that you should think about?
- Beneficiary designations: When clients have transferred to us we review all asset titling and the number of times that there is no beneficiary or a wrong beneficiary on their account(s) is surprising. Even though you may think that you have a beneficiary named on your accounts take a few minutes to check and make sure that it is indeed the right person and you are passing along what you what them to have. This is especially true if you have divorced, remarried, changed jobs or have a work retirement plan that has changed administrators.
- Transfer on Death (TOD) accounts: Non-retirement accounts shouldn’t automatically go to probate. Adding a transfer on death will allow you to designate who will get the assets in your account. A TOD is adding a beneficiary to your non-retirement account.
- Trust or estate designations: Designating your trust or estate as your beneficiary can makes sense but it is important that you understand the why. Consulting with your attorney and financial planner is key. This can be a useful tool if you want to “control” the assets after your passing, but the language and structure have to be spot on.
- Payable on death: For bank accounts you can also add payable on death designations. Again this is like adding a beneficiary to your accounts.
Looking at beneficiaries and talking about how assets will be transferred should be part of your review with your financial planner. If you have questions, feel free to reach out to us.
Michelle Cortes-Harkins & Rick Harkins LPL Financial Planners/Wealth Management Advisors
Securities offered through LPL Financial, member FINRA/SIPC.