It can take more than a will to make sure your will is done

Certified Senior Advisor (CSA)®

Many people don’t know it’s not enough just to name people as their heirs in their wills.

If you want all your assets at your death to go to the right people for the exact purposes you intend—especially where your grandchildren are concerned, it’s important that you name your beneficiaries for the assets that will bypass your will’s probate.

These assets include pensions, qualified retirement accounts (employer and individual), annuities, and life and disability insurance policies. If you fail to name your beneficiaries, after your death your state of residence will decide who gets them, and the state’s choice might not reflect your wishes.

For example, the state could designate your estate as your beneficiary, possibly increasing your estate taxes and settlement costs; or give a particular asset to a person or organization named in your will. While the state’s decision could be challenged, you can prevent inheritance battles by naming your beneficiaries. This is especially true when minor age grandchildren are involved.

Although many seniors strongly desire to leave a financial legacy for grandchildren, the mechanics must be set up carefully. Don’t name minor children as outright beneficiaries because they can’t control financial assets. Instead, set up a trust to distribute the assets to your grandchildren (or designate a guardian of your choice, rather than leaving this decision to the state).

Be aware, also, that in many states children can take control of assets when they turn 18. If your 15-year-old grandson seems prone to walk on the wild side, giving your IRA, pension, or life insurance monies to him when he turns 18 may not be what you want. However, giving the proceeds to him through a trust can slow down the distribution considerably.

In addition, remember to change a beneficiary when the person predeceases you. If you name your best friend as the beneficiary, but forget to change the designation when the friend dies, when you later die your friend’s spouse or children could claim they are the rightful heirs of your assets, rather than people named in your will. To stay in the driver’s seat when deciding who ultimately gets your money, name a contingent beneficiary, and to be on the safe side, name two.

You can obtain beneficiary change forms for Individual Retirement Accounts from the financial institutions that manage the accounts. For corporate retirement funds such as pensions or 401(k), 403(b) or 457 plans, contact your former employer’s human resources or benefits department; and for insurance policies and annuities, contact the insurance company.

Remember, obtaining advice from a qualified estate planning attorney will help you avoid significant taxes or decreased benefits for your heirs and loved ones.

Finally, keep good records, including copies of beneficiary change forms.