Sally had it all—a comfortable home, a successful husband, and two promising young children. When her husband, Andrew, died in a tragic skiing accident, Sally was devastated. How would she manage without Andrew’s support?
Even in her grief, however, Sally knew that Andrew’s Will
left her everything. As difficult as the loss of her husband was, she thought,
at least she would be well provided for. Or would she?
Andrew’s Will did leave everything to Sally, but the story didn’t end there. His life insurance policy named his parents as the beneficiaries, and on his 401(k), the beneficiary was his ex-wife. Andrew had made these designations before he and Sally met, and he never thought to update them.
The results were heartbreaking. Sally was left with the
house, Andrew’s car, and the money in their joint checking account. The life
insurance proceeds and retirement account—Andrew’s most significant assets—went
to others.
When it comes to estate planning, having a current Will is
only half the battle. Your Will controls only your “probate estate.” This
includes the assets that you own in your name alone and that do not list a
beneficiary—assets like bank accounts without a co-owner and household items.
Any asset that is jointly owned or that names a beneficiary transfers
outside of probate. These are your “non-probate assets.” Life insurance,
retirement accounts, and jointly held real estate are foremost among them.
In other words, no matter what your Will says, your
non-probate assets will belong to the surviving joint owner or beneficiary. There are far too many stories of couples like Sally and
Andrew who had current Wills but out-of-date beneficiaries. Unfortunately, once
a spouse dies, it’s simply too late correct the problem.
The good news? Updating your beneficiaries is easy. Simply
call your life insurance company or retirement plan provider or visit their
websites. Verify that your beneficiary designations and your Will work together to provide for the people you
care about most.
The forms for making these designations are often available
online but may need to be printed out and mailed to the provider with an
original signature.
If your Will includes a Disclaimer Trust or Children’s
Trust, it may be necessary to list the “Trustee under my Last Will and
Testament” as a primary or secondary beneficiary. If you have any questions,
ask your attorney for help.
Please remember that the information contained on this blog is intended to provide general information about legal topics and should not be construed as legal advice.
