Pretty much everything you own, transfers in one of three ways: 1) by title; 2) by will/trust; or 3) by contract.
When’s the last time you’ve reviewed your beneficiaries? This question was explored in a recent InsideNoVa article, “Naming Beneficiaries: A Quick Tip to Reduce the Surprise Factor.”
For example, if your checking account is titled in your spouse’s and your name “with rights of survivorship” (WROS), you effectively co-own the account. That one should be all set, at least until the surviving spouse dies.
Your will or trust instructs your executor on the transfer of any assets that aren’t transferred by title or contract. That’s probably at least some of your estate. Therefore, if you don’t have a will and/or a trust, make an appointment with an estate planning attorney to make sure you have this important document.
Next, the beneficiary designation contacts for assets like your retirement accounts, pension plans, and insurance policies should be reviewed when there’s a life event, like birth or adoption of a child, a divorce, or a marriage.
Start the process by identifying all the accounts you own, including life insurance policies, annuities, and the like that will pass by beneficiary designation. You should then see who the primary and contingent (secondary) beneficiaries are for each. You can usually assign percentages to your beneficiaries. Therefore, you could name your spouse as primary beneficiary, 100%. Your siblings could then be secondary beneficiaries in equal shares.
Some contracts allow you to have your funds be distributed “per stirpes.” In that case, if you name your three children as primary beneficiaries, they each would receive a third. However, if your eldest son dies with you, with per stirpes, his share will go to his children.
In addition, there may be situations when you might designate a trust as a beneficiary. This can get complicated, so work with an experienced trust and estate attorney.
In any situation, if it’s been a long time (or never) since you reviewed your beneficiary designations, do it right away.
Reference: InsideNoVa (October 26, 2018) “Naming Beneficiaries: A Quick Tip to Reduce the Surprise Factor”