Basic estate planning is actually very simple if you know what to do. The most powerful instrument in estate planning that anyone can use, I believe,  is an accurately-structured beneficiary designation within their retirement plan, life insurance contracts and annuity contracts. Much of the wealth today will pass through the form of retirement plans and life insurance, so lets review a few items to make sure your beneficiary designations are on course to accomplish your stated desires. Here are few points to build our foundation of discussion:

  • Assets, such as life insurance, are a contractual document and follow the beneficiary listing within the contract.
  • Beneficiary stated assets go directly to the beneficiary on record and DO NOT pass through the estate probate and the directives set within a Last Will and Testament unless you specifically list your estate as the beneficiary or have no beneficiary listed on file.
  • The above statement means that a Last Will and Testament DOES NOT necessarily control all of your assets.
  • These statements combined provide an understanding that it is imperative to have a correct beneficiary for any asset that will pass by such a method.

Having proper beneficiary designations on specific assets can alleviate many issues relating to the protection of those assets. It can protect them from potential  liability claims, court judgments,  tax amounts (if any) due on the distribution of such asset and the potential of spend-thrift concerns for those who may receive the money. Here is a checklist of some important items you need to review and keep on file:

  • Determine which items have a beneficiary listing. This will definitely cover your Life insurance, Annuity Contracts and Retirement plans.
  • Obtain and review your current beneficiary listings.
  • Meet with your attorney and/or financial planner to determine if the stated listings accurately reflect your wishes and desires.
  • Submit any changes to the appropriate company and maintain a copy in a readily available file.

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