As Martha’s family began to settle her estate, they learned that she had prepared an estate plan that split her assets evenly between her four children. This seemed fair to everyone. Then, the executor of her estate learned that Martha had designated beneficiaries for two large bank accounts, three savings accounts, and her two insurance policies. This completely upset the balance of her estate: some of her accounts were split between the four children, but her oldest daughter was the sole beneficiary for the three largest accounts. Martha did not realize the importance of beneficiary designations.
Seems Like a Fast and Easy Way to Get Money to Your Heirs
Beneficiary designations trump Will provisions. Accounts with named beneficiaries typically do not become part of a testator’s probate estate. Instead, the money in the accounts, or the insurance proceeds, goes directly to the beneficiaries. This helps them get the money they may need without waiting for the estate to settle.
Sometimes Fast and Easy Is Not Best
However – and this is a big however – if your beneficiary designations are not in sync with your estate planning, imbalances can occur. Martha could have considered the balances in her accounts while preparing her Will or could have split all her accounts evenly between her children.
If Martha had just not bothered to fill out her beneficiary designations, a different situation would have happened. The money in her accounts would have become part of her probate estate. Her children eventually would have received their inheritance based on the Will, which split everything equally between them. However, creditors and legal fees would have taken a bite first.
Unintended Consequences Ahead
Martha’s actions were not done to hurt her children. She just did not realize how important her beneficiary designations were when it was time to divvy up her estate assets. Or she may have moved money between accounts, then forgotten to change her designations. Either way, her estate ended up out of balance.
Contact the attorneys at the Dillon Law Group, PLC with your questions and concerns. We give our clients the personalized attention they deserve. Call us at 757-962-4796 to schedule an appointment or use our Contact Form to let us know you’re interested. We assist clients in Virginia Beach, Newport News, and surrounding areas.