Your will isn’t the document that determines all beneficiary distributions.

Believe it or not, the last will is not the end all be all of estate planning. Beneficiary designations on accounts such as PODs on bank accounts or beneficiary/TOD designations on investment accounts actually come before a will in the distribution of these accounts. Therefore, it is always important to be mindful of where and how updates are made overtime.

Who is listed as a beneficiary can have tax impacts, along with how the distribution is made.

Having a beneficiary is half the battle in avoiding probate when settling an estate. This also becomes important in making a more concerted effort to ensure that accounts aren’t left to unclaimed property with the state (more on that later). But the other consideration when crafting a legacy or estate plan is who the money is being left to along with how. As an example, in the state of NJ where we reside and operate if money is passed between spouses and down the “bloodline” to kids, grand-kids, great grand-kids there is no additional considerations outside of the estate size for any taxes. However, if the distribution doesn’t go from parents to kids or kids to parents and becomes more lateral where it is left to siblings or non-familial beneficiaries there is a transfer tax that is implied.  **Also not the SECURE Act change to non-spousal tax-deferred retirement accounts. Previous inheritance before the act will still be able to use the ‘stretch’ provision only requiring small distributions each year whereas any tax-deferred non-spousal inheritances after Jan 1 2020 will need to take all of the funds out within 10 years! This can have significant tax impacts to the beneficiary, the value of the estate and its ability to last.

Estate planning involves more than beneficiaries, there are 3 important documents to cover.

Estate planning is often thought of as just “how do I pass my accounts or physical property after my passing”. Although this is a part of the process, a holistic set of estate planning will also cover additional planning to include the Last will (where distribution of accounts and property is outlined), Living Will (also known as a healthcare directive), and a Durable Power of Attorney. This will ensure that all of your wishes considering healthcare decisions/provisions, who is trusted to act on your behalf for all medical decisions or financial decisions should you be unable or incapable and how you desire for your accounts and possessions to be distributed in the unfortunate event of your passing.

Don’t think of only monetary value in planning, sentimental value can go much much farther.

During a thorough estate or legacy planning process it is important not to get hung up on only what has a monetary value to determine it’s importance. Instances where this can be seen are those such as an estate that has multi-million dollar assets but the biggest item of contention is a five dollar trinket, decoration or piece that was used in every family gathering, special holiday etc. So be mindful of how powerful the sentimental value of something can be even if there is plenty of monetary value to account for as well.

Accounts that aren’t accounted for can go to unclaimed property where the state takes possession.

If accounts are “missed” or unaccounted for in estate planning and the executor/executrix is unaware that the account was owned it could go left behind. When this happens there is the chance that the account due to lack of activity, lack of response and returned mail to the account provider that the account can be turned over to the state in unclaimed property. This becomes important in proper planning and continued revisiting of your estate planning over time. This can account for the transfer of accounts over time, the opening of new ones and other considerations.

Estate planning should be started earlier on and built upon or edited as needed.

Although it is not a topic that most people like to cover, it is important to get a plain laid out earlier on in your life and make adjustments along the way as previously mentioned. This approach works well for both your legacy and financial planning to set plans in place while adjusting as your life and external circumstances change over time.

Where an estate plan is not in place probate will need to be done with the courts.

If plans have not been made either in the entirety of your estate or even just for certain parts (lets say you’ve designated beneficiaries on all your accounts but there are no provisions for real property such as your home, car, art, collectibles etc) the assets not designated will need to go through probate. In addition to this, there can be some opportunity for tension or disagreement amongst your heirs with where and how these things will be split.

Estate planning can help you set up safeguards for your beneficiaries (spending limits, protections from lawsuits and/or divorces in the future)

Considering provisions to help preserve your estate for one of more generations is a common practice. Most often while working with clients we have found that these are thought of as spending limits from the inherited assets. Although this can be a way to help preserve the value if there are spending concerns its also important to think about if preserving the value of your estate has any other potential threats even if you don’t have a concern about the beneficiary’s spending habits. It is important to think of if it would be worthwhile to consider protection from any litigation, divorce or other concerns you may have.

The work is not all on you.

When it comes to financial and legacy planning, we have noticed over the years that the thought of these tasks can feel daunting to our clients. Many times, this could be reason enough for them to avoid planning at all because of the concern for how much work they will have to do. Working with experienced professionals for your financial planning and estate planning needs will take the overbearing feeling off of you and help to get the work done. As you’ve noticed in some of what we have outlined here, having experience with many different clients’ needs overtime helps us navigate you through solutions that would fit your goals and needs.

Proper planning removes stress for you and your loved ones.

Planning can and will lead to not only your piece of mind in knowing you have articulated the concerns and desires for the aforementioned topics but it will also give piece of mind to your loved ones that you have determined how you want these plans to be executed. It takes stress both off of yourself as well as your loved ones that would otherwise have to settle things on their own not fully knowing (or in the worst case having different interpretations) of what it is that you would have wanted. Making a plan will relieve the stresses that both you and they may feel in regard to those “what if’s”.

Next Steps:

It’s never too early or too late to get started! If you are interested in speaking with a Financial Planner here at Coastal Wealth Planners you may choose from the following:

 Complete Our New Client Questionnaire

Set up a FREE confidential consultation

 Register for Our Client Planning Portal

You can always reach us by phone as well at (732)554-1099 or [email protected] .

Looking to keep up to date on news, blog posts and other important information from us?

Sign Up For Our Mailing List


Comments are closed