If you have your will and trust documents ready you may be sitting comfortably with the belief that you have your estate needs handled -- but hold on.
You might just have forgotten something very important: the name of the designated beneficiaries on your bank accounts, life insurance policies, 401K and other financial accounts. If those don't match up with what your will says, your will could end up being practically useless.
When you die, any accounts that you have with a legal beneficiary assigned to them may belong to that beneficiary, regardless of what your will might say. This is a common problem. So is having assets titled only in one person's name -- which forces them to go through probate. That whittles away at the value that you have accumulated during your lifetime, which is probably not what you want to have happen.
If it's been a while since you looked at your designation of beneficiary forms for your life insurance, pension plans, 401Ks and other annuities, it's time to pull them all out (or request copies from the financial institutions) and look them over to see if they correspond to your will. If not, you need to quickly update them.
It's also time to look at your bank accounts, stocks, bonds, and property holdings. If you are the only person listed on the title, you should consider adding someone else's name as a beneficiary in order to avoid letting the accounts and other holdings go into probate. There are several options:
-- A joint tenant with right of survivorship is perfect if you have a spouse because both of you are presumed to be the property's owner and 100 percent ownership will pass to whichever of you survives the other.
-- A tenant in common designation is recommended if you want the account or property to be subject to a will. When the account holder dies, his or her share passes to the heirs listed in his or her will.
-- A designated beneficiary title, which is also sometimes called a payable on death or transfer on death title, automatically transfers ownership to the beneficiary without going through probate and without being subject to any will.
For more advice on estate planning and asset management, especially if you have complex holdings, consider contacting an attorney.
Source: Market Watch, "Hidden estate planning mistakes that have horrible consequences," Dana Anspach, March 06, 2017