Comprehensive Planning. Lifelong Solutions.

Beneficiary Form Cautions

by Maureen E. Hook, Ph.D.
March 18, 2013

Download and View (.pdf)

Beware of whom you designate as a beneficiary for your bank, brokerage, or retirement account. Even if you have a will, these designations override the will. There are advantages to this separate designation process–just be sure you know what you are doing. When you open one of these financial accounts, you have the option of designating a beneficiary, who may or may not be included in your will. The advantage is that upon your death, the assets pass directly to these beneficiaries bypassing the probate process. This is a nice feature, but just make sure those prior designations continue to reflect your current wishes. If you intended at the time of making a will of having your entire estate pass equally to your children, a prior designation of a sibling on a retirement account, for example, will still be in effect unless it was changed. The funds in the retirement account in that situation would go to the sibling, not your children. Martin Shankman, an estate-planning attorney in Paramus, NJ has seen such situations occur so many times that he calls the beneficiary designation on financial instruments “bank-teller estate destruction.”

So to avoid these horror stories, financial planners and attorneys recommend that you review all of your beneficiary designations at regular intervals, but at a minimum, when there is a life-changing event such as a birth, marriage, divorce or death. Retirement accounts are particularly complex. If the beneficiary is a spouse, who dies before you, the funds in that account on the holder’s death ,will flow to the estate, triggering a large tax bill. For retirement accounts, it is recommended to have contingent beneficiaries, who will become the beneficiaries, if the primary beneficiary is no longer living. Taxes, in this way, can be reduced. Changing jobs also qualifies as a significant live event. If you have a 401(k) retirement account with one employer, the beneficiary designations do not automatically roll over to the new employer’s plan or to an IRA.

Whom, then, should you name as a beneficiary? Just about anyone you choose, but not minors, people with disabilities, people who lack the ability to manage money or have credit problems, or people with marital problems. These categories are much better dealt with through trusts, which protect the individuals from their own mismanagement, loss of property to creditors or in-laws, undesirable tax consequences, and potential loss of public benefits. Sometimes, it is wise to name a class of people, like “all my grandchildren who survive me”, rather than naming specific individuals. Then, as more grandchildren are born, the designations do not continually have to be updated. However, step-grandchildren are an exception to this rule. They need to designated by name. (All information from Carolyn T. Geer, “Beware the Beneficiary Form,” Wall Street Journal, July 5, 2011)

As one can see, these issues are very complicated. It is wise to seek advice from experts like the attorneys at Hook Law Center who are very informed about all these issues.

ask kitkat logo

Cats at the Courthouse

Hook Law Center:  Kit Kat, are cats really living in a courthouse?

Kit Kat: Yes, they really are. There are 2 cats living in a courthouse in Lebanon (Boone County), Indiana. Their names are Boone (a male) and Panda (a spayed female who’s black and white like a Panda). No one is complaining either. The officials at the courthouse not only know about them, they are actually grateful that they’re there. You see, Boone and Panda are working cats that keep pigeons away from the dome of the courthouse. It also seems to have a beneficial effect for the whole town as well. Apparently, what they do is keep watch at the windows in the dome and that is enough to keep the pigeons at bay. Pigeons can really be destructive in old buildings with towers or domes that are mostly constructed of wood. St. Paul’s Catholic Church in downtown Portsmouth, VA had to rebuild their bell tower after years of pigeon droppings that had eaten away at the wood.

Boone and Panda were taken in as kittens They live in the dome of the courthouse. Staff there feed them and clean their litter daily, though there is a kitty door so they can go and come at will. According to Maintenance Director, Mike Miller, they have saved the county thousands of dollars in cleanup and staff pay. Those are some smart cats who are earning their keep, and helping an entire town in the process! (http://fox59.com/2013/02/27/boone-county-uses-cats-to-keep-courthouse clean/?hpt=us_bn9)

Upcoming Events

  • Hook Law Center is presenting a seminar on Estate and Long Term Care Planning to NARFE (National Active & Retired Federal Employees) Churchland Chapter 129 at Dennis’ Steak and Spaghetti Restaurant, 3356 Western Branch Blvd., Chesapeake, VA on April 9, 2013 at Noon.
  • Hook Law Center is presenting a seminar on Estate and Long Term Care Planning at Sentara Princess Anne Hospital, 2025 Glenn Mitchell Drive, Virginia Beach, VA 23456 on April 24, 2013 at 5:30 p.m.
  • Hook Law Center will be presenting a seminar on Estate Planning and Long-Term Care Planning at Lake Prince Woods, 100 Anna Goode Way, Suffolk, VA  23434 on May 3, 2013 at 2:00 p.m.  Click Here to RSVP.
  • Hook Law Center will be presenting a seminar on Estate Planning and Long-Term Care Planning to the Portsmouth Area Chapter of the Military Officers Association at the Hilton Garden Inn in Suffolk on May 9, 2013 at 8:00 p.m.
  • Hook Law Center will be presenting a seminar on Estate and Long Term Care Planning at Sentara Virginia Beach General Hospital, 1060 First Colonial Road, Virginia Beach, VA 23454 on May 20, 2013 at 6:30 p.m.
  • Hook Law Center will be speaking on Reducing Medicare Liens at the Virginia Trial Lawyers Association meeting in Virginia Beach on May 21, 2013 at 3:00 p.m.
  • Hook Law Center will be presenting at the VSB Trusts and Estates Section – Virginia State Bar – 75th VSB Annual Meeting in Virginia Beach on June 14, 2013.

Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

This report is not intended as a substitute for legal counsel. While every precaution has been taken to make this report accurate, Hook Law Center assumes no responsibility for errors or omissions, or for damages resulting from the use of the information in this report.

Free Seminars

North Carolina – The Dangers of Doing Nothing – 12PM

2017-09-26 at 12:00pm
Reserve your Spot

North Carolina – The Dangers of Doing Nothing – 7PM

2017-09-26 at 7:00pm
Reserve your Spot
Testimonials
I am beholden to Mr. Hook and the entire staff who advised me during the difficult time following my sisters’ death. The firm was highly recommended and I understand why. Any bewilderment I felt going through the estate process was eased by the compassion and professionalism exercised by this law firm. I am eternally grateful.
Survey comments from M.W. 15434
Start Planning Now
Speak with an attorney today:
  • This field is for validation purposes and should be left unchanged.
Like us on Facebook