Who gets what?

Did you know that you can assign recipient/s to most of your bank and investment accounts?  This may be accomplished by adding additional titling to the current account.  Why would you do that?  Often, it’s to ensure the right people, get the right stuff, at the right time.  This allows accounts to transfer directly to another individual privately when it’s appropriate and avoids the public process of probate.

We’ve begun our fall financial review process with clients, and this is one of several agenda items that we cover each year.  It’s common to have a spouse as the primary beneficiary on your life insurance policy/s, employer retirement accounts, and individual retirement plans (IRAs).  What’s less common is ensuring the misc. accounts that you share or own individually are titled in a way that support your financial plan.

These accounts may include personal checking or savings accounts, stock purchase plan, or after-tax investment accounts.  It’s not uncommon to have smaller retirement plans floating around from your previous employment.  There’s value in consolidation for better record keeping and accountability on the job description these dollars serve.  Fewer accounts to manage means less investments to rebalance as part of your plan.  Completing a “beneficiary designation checkup” proactively leads to fewer surprises and less reacting overtime.

Did you know joint owned property and accounts may benefit from adding a beneficiary designation?   This would push assets or property to an entity or individual should something unexpectedly happen to both owners.  As assets and wealth grow overtime it’s helpful to evaluate what you have and its location.  How easy is it for you and your spouse to locate all your accounts and property?  This may be completed by updating your balance sheet.  Now, how easy is it to answer who gets what should it be necessary?

These above steps are even more essential when adult children must step in and take over financial decision making for aging parents.  It’s routine to find retirement accounts listing a deceased spouse or one adult child instead of all adult children.  When adult parents have owned accounts for as long as they have, it’s not uncommon for companies to change record keeping responsibility.  Banks merge and retirement providers exit the business or consolidate with a larger entity.  Through this shuffle, beneficiary designations may be missed or not transfer as designed.  With no beneficiary designation in place, assets may end up going to the estate as opposed to children, grandchildren, or charity.

Our parent’s and grandparent’s generation rarely discussed money or assets; it was a private topic.  That may cause difficulties when adult children must intervene and make decisions on behalf of their parents.  Ask any adult children who are responsible for financial decisions for mom/dad or who have settled a parent’s estate about their experience.  The sheer amount of time, patience, and energy it takes when dealing with various financial institutions (and their rules and guidelines) can be daunting.  This alone maybe the helpful nudge necessary to get your own accounts in order so not to burden those you care about.

At some point, it may be valuable to speak with an estate attorney who can provide guidance and best practices.  This includes understanding the rules and guidelines governed by your state of residency which impacts your estate plan.  Often the use of revocable trusts maybe relied upon to ensure the financial plumbing of assets, property, and income to the right people.