Estate planning is so much more than filling in the blanks on a few forms that you have printed out from the internet. In addition to having the proper documents and fiduciaries, you need to make sure that the estate plan is coordinated so that your beneficiary designations do not upset what you think is a perfectly drafted estate plan. For example, if your will leaves everything to your son and daughter equally, but your money is in a bank account that is joint with your daughter, then she will inherit all the money in the joint bank account notwithstanding what the will says.
Retirement account beneficiary designations present additional challenges due to the fact that, for many clients, this is where the bulk of their wealth is, and retirement plan custodians often have their own set of internal rules and policies that must be complied with. Thus, in many instances it is difficult to figure out how to complete your retirement account beneficiary designation, especially if you have a living trust or would like to leave money to charity or wish to minimize income taxes.
If you are married, naming your spouse as the beneficiary of your retirement plan is usually (but not always, especially in a second marriage situation), the best option. This is due to the fact that a surviving spouse can “rollover” your retirement account into his/her own which typically leads to the best tax results. If you are re-married and have children from a prior marriage, there may be better options available to you that would involve the use of a trust. However, this area of the law is fraught with traps for the unwary so please make sure you proceed with a competent estate planning attorney.
