Nevada Estate Planning & Elder Law Information Blog

Updating Your Beneficiary Designations Avoids Unintended Consequences

It is important to insure that your beneficiary designations are consistent with your estate plan.  Did you know that the beneficiary designation you list on certain assets such as your insurance policies or your pension plan will take precedence over your will or trust?  If the beneficiary designation is not consistent with your overall estate plan, you could end up with an unintended beneficiary, and the wrong person could inherit your wealth.  Therefore, it is very important to keep these designations current. 

One of the biggest mistates people make is forgetting to update their beneficiary designations when they get married, divorced, have children or grandchildren, or when one of their designated beneficiaries passes away.  Any time you have major life changes, make sure you update your beneficiary designations as well.  You can update your beneficiary designations at any time by contacting the company who administers your policy or plan.  Generally, the company will require you to submit your request in writing, and they may require that you use their special form.  There should not be any cost to you to make this change.  Additionally, consider an annual check up with your financial planner or estate planning attorney, so that they can ensure your plan still mets your needs.

Consider Your Options Carefully When Selecting the Beneficiary of Your IRA

Were you aware that the selection of the beneficiary of your Individual Retirement Account or "IRA", could have a big effect upon its value in the future? 

If you have an IRA, you are probably aware that once you reach a certain age you are required to take mandatory distributions from your IRA.  However keep in mind that these are minimum mandatory distributions, you are not required to spend the entire balance.  If you do not withdraw all of the money from your account before your death, it will pass to your beneficiary; and, depending upon who you have named as the beneficiary, the balance in your account can continue to grow in a tax deferred manner for many years into the future.   Consequently a person of modest means can grow their IRA to a significant estate for their family and loved ones.

Your choices for beneficiary include a spouse, children, grandchildren, other individuals, charities, or a trust.  Each choice has benefits and detriments so be sure to weigh your options carefully.  We recommend that you talk with an estate planning attorney as well as your family accountant, or financial professional before making your final choice.

Why Anyone Going Through a Divorce Can Benefit From Estate Planning - Part I

So you have just learned that your spouse wants a divorce.  Maybe you and your spouse have grown apart, or worse yet there has been infidelity, a financial lost putting a strain on the relationship, or a disagreement over family.  You are feeling hurt, confused and maybe even angry.  You probably know that it is important to seek counsel from a family lawyer about your rights during a divorce or legal separation, but did you also know that this is an important time to talk about estate planning?

If you do not have any existing estate planning documents, it is important for you to get information about what would happen to your assets, if you were to die or become incapacitated while the divorce action was pending.  In the state of Nevada, it is generally the rule that a party's marital interest in an asset or debt remains in effect until the divorce is final.  This means that even though a divorce has been filed and is in active litigation, were something to happen to you while that legal action was pending, your estranged spouse would continue to have a marital interest in your assets, and would under the law, be the natural beneficiary of your possessions. 

For example, the spouse of a divorcing party with no children, would be entitled to receive 100% of the other spouses assets, regardless of how advanced or acrimonious the divorce proceeding may be.   The good news, however, is that you can avoid this outcome by meeting with an estate planning attorney who can draft a will or trust which will overcome this legal presumption. 

You should also consider those assets in which you have already listed a beneficiary.  Certain assets cannot be changed without the divorcing spouse's consent, but other assets can be quickly and easily changed.  For example beneficiary designations on life insurance policies, and certain types of IRAs can usually be altered without your spouses consent.  An estate planning attorney can help you make these changes, or alternatively you may be able to contact the carrier directly who can provide standardized forms for your use.

 

You Choose Your Beneficiaries

Did you know that in the absence of an estate plan designating who you want your assets to go to, the government will decide for you.  This governmental directive is known as intestate succession.  The law presumes that you would first want your estate to pass to your spouse, and then to your biological children.  In some cases this may mirror your own wishes, but what about the stepdaughter that you've raised since childhood as your own, or your life partner to whom you are not married, but with whom you have spent the last 20 years.  While these people are in every sense of the word your family, the law makes no provision for their welfare, and they would not be beneficiaries under the terms of intestate succession.

In order to assure that your wishes are followed, it is safer to use either a will or trust to designate your beneficiaries, and insure that you get to direct the distribution of your assets.  Keep in mind that personal property and other items of great sentimental value can oft-times be more meaningful and more difficult for your heirs to divide, than items of great monetary value.  If there is a family ring that you want to pass down to your eldest grandchild, or a pocket watch that you want to go to your son, a will or trust will provide a means for your to make a special designation of this item.  Using estate planning tools lets you have more control.