A beneficiary designation or beneficiary change to accounts can certainly thwart your estate plan as described by attorney Mina Sirkin below.:
Here are several ways a beneficiary designation can change your entire estate plan which you need to be aware of when you are thinking of a beneficiary change or designation.
A beneficiary designation can make your estate distribution unequal.
A beneficiary designation can leave assets to someone who is on public benefits and make them lose their benefits.
A beneficiary designation has priority over the will with regards to that particular account.
A person can be manipulated or influenced to change his or her beneficiary designation.
Your designated beneficiary’s spouse will try to control how the beneficiary spends that money. We can help protect your beneficiary in spending habits and in a potential divorce. Ask us.
A beneficiary designation form is not always accepted by the financial institution, bank or life insurance company.
If you fail to update your beneficiary designations, to be consistent with your estate planning intentions, your beneficiaries will feel bad about each other.
If you forget to update your beneficiary designations after a divorce, certain 401K accounts will go to your ex-spouse, despite your intentions. This article also applies to trusts whether or not they are administered by family or professional. A beneficiary alteration can also have an adverse tax impact when it comes to IRA accounts and 401k accounts because only a spouse can continue to defer the tax with a rollover IRA. Other beneficiaries have to pay the tax under the CARES Act.
If there are disputes about your beneficiary designations, the financial institutions may interplead the funds in court or place the funds in court, leading to substantial expenses of litigation to your beneficiaries. Read this great article by a great estate planning attorney, Dennis Sandoval about beneficiary designations here.
To be sure that your beneficiary designations are coordinated with your estate plan, call attorney Mina Sirkin and let our skilled lawyers assist you in your estate plan and beneficiary designations. Call 818.340.4479 for attorneys who help with beneficiary designations.