As an estate planning and probate attorney, it is always interesting to see what clients and/or decedents have done with regard to beneficiary designations on their various assets.  When a new client (throughout this essay I may be referring to a single person and to a husband and wife as a “client”) come to see me, after I have spent time getting to know them, I eventually ascertain the assets that comprise their estate.

Frequently clients have a haphazard list of beneficiaries.  Even if they have been consistent, it may not be well thought out.  I suggest that everyone, whether you have a living trust, a will, or not review your beneficiary designations.  Here are some things that you should consider. 

1.  Understand the Fundamentals

Beneficiaries can be listed for many types of assets, including, but not limited to, life insurance policies, retirement plans and annuities.  Furthermore, payable on death or transfer on death can be done on many accounts at the bank.

Virtually anyone and anything can be listed as a beneficiary.  The obvious choices are spouses, children, trusts, and charities.  When a beneficiary is named, the asset will be paid to the listed beneficiary.  This may or may not be what you would have wanted.  You may have gotten married (or divorced) since you named the beneficiary.

This leads us to point number two.

2.  Maintain Current Designations

Undoubtedly if you visited with an estate planning attorney and you undertook an estate plan, whether it be living trust based or will based, the lawyer asked you to provide him or her a list of your assets.  More than likely, he/she asked you for the beneficiary designation. 

However, if you have not met with an attorney, or if it was several years ago, or if there have been significant changes in your life (e.g. divorce, marriage, birth or death), you may need to change beneficiaries.

3.  Taxes are always Lurking

This is where an estate planning attorney can be especially helpful.  Just because an asset has a beneficiary on it, does not mean that it is not part of your estate.  Keep that in mind for potential estate taxes (this year one can have $2,000,000 without there being any federal estate tax and in 2009 the amount is $3,500,000).  Also, when distributions are taken on retirement assets, taxes have to be paid. 

You may have noticed this week that the man who designed the packaging system for Pringles potato chips was cremated.  Nothing out of the ordinary there.  However what happened with those ashes is unusual.  He had a request that his ashes be buried in one of those Pringles cans and the family complied.

When I prepare an estate plan for either an individual or a couple, in I prepare a living trust, a will, a power of attorney, an advance health care directive, a HIPAA release, deeds for real property (real estate) and for married couples frequently a marital property agreement.

Some living trust attorneys include a paragraph in the Will that contains instructions, if any, concerning funeral, memorial service, burial or cremation.  Other lawyers provide forms for the client to complete that allow the client to indicate the handling of their remains; the type of remembrance service; and to provide instructions.

Most of my clients have something they want to say concerning these issues; and some have very well thought out instructions that include what type of music should be played, food served, etc.

I always caution clients to let their family, successor trustee/executor know their thoughts or let them know where they have listed those thoughts so that they can be found immediately.  Otherwise, there is a risk that something happens that the client would not have wanted.  Obviously, my client will not be aware if his/her wishes were not complied with, but the family members will.

A conscientious estate planning attorney will ask the kind of questions to allow the client to consider issues that he or she may not have previously considered.  This is simply one such issue.  Read past and future blog posts to learn about other issues or call if you would like to make an appointment.