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Last month we gave you a list of items to consider as you are gearing up to have your tax returns prepared. One of those items was making sure that your beneficiary designations are in line with your estate planning. Remember that your will and trust don’t typically direct the distribution of assets with beneficiaries already designated. This includes IRA accounts, 401(k), annuities, life insurance, pay on death accounts, transfer on death deeds, and properties titled as “joint tenancy with right of survivorship”.

In our practice, we recently worked on a case where an individual named both children as equal beneficiaries of an IRA, but subsequently left everything under a will to only one of the children. The will did not control the IRA distribution (correctly, under the law), but is that what the decedent intended? If a child was excluded under one document, wouldn’t the decedent want that decision to be consistent? Perhaps it was intentional, however, the beneficiary spent more money than otherwise necessary on the probate and administration to clarify the decedent’s intent. We have seen this situation more than once. If the plan had been up-to-date and indicated that the intent was to treat those assets differently (not for the will to control everything), the family would have been able to approach the death as an opportunity to connect, not to continue the past conflict.

When you take your documents to your estate planning attorney to discuss any changes in your life (divorce, deaths, etc.), be sure to also review the beneficiary designations you have already made. Sometimes the designations are made on the fly without realizing how the whole plan will come together or your intent might change regarding how the assets should be distributed. Even when everything is set exactly how you want, you still need to make sure your intentions are clear to those you leave behind. If you have made designations different than the distribution of assets under your will or trust, you may want to include a statement of that fact in your will or trust. However, the language used can create its own problems if not done correctly, so be sure to obtain professional advice on the issue.

For assistance with Michigan estate planning, probate, and trust administration, contact us for a no-cost consultation. We serve clients statewide virtually, and in-person throughout Southeast Michigan.

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