Is Your “EX” Your Beneficiary?

By Money & Finance Editor Ellen Duffy, CFP™

A recently published Wall Street Journal article chronicled the experience of a family fighting in Federal Court over the retirement account of their deceased brother.

Unfortunately, the deceased had named his girlfriend as beneficiary on his retirement plan while they were dating in the 1980s. He never changed the beneficiary designation. The account is estimated to be valued at over $1 million. Can you imagine? This case is a stark reminder that beneficiary forms on bank accounts, retirement accounts and life insurance policies matter, and often will trump a will.

Inspired by this story, I encourage everyone to confirm the beneficiary information on all investment accounts, retirement accounts, bank accounts and insurance policies. Many financial assets may pass with relative ease to a designated beneficiary. Have you completed a will or estate plan? Creating these documents is one of those items that tends to be “kicked down the road” regularly. Indeed, it is an uncomfortable conversation to broach with family and may be considered a neglected part of financial planning. Yet, many Americans may be surprisingly misinformed at the legal process that follows a loved ones’ death.

A will is a simple document that states your wishes for the distribution of your property and belongings. Many wills are subject to the probate process. Probate refers to the legal process of validating a will, paying the decedents debts and taxes, and distributing assets among other tasks.

An estate plan goes much further than a will, and may also help to reduce estate taxes, fees and court costs. Another good reason to have an estate plan is to minimize the time-consuming probate process, expense and loss of privacy. Probate records are accessible by anyone. Still, an estate plan may not be beneficial for everyone, and it is important to consider the size of the estate, and the state of residence.

A thoughtful and written estate plan can also serve to address complexities around blended families, charitable goals and other sensitive family issues. Mostly, it can help you feel more confident, and provide a sense of accomplishment for an important, and oft-delayed task when it is completed.

Ellen Duffy CFP™ simplifies money and investing so that her clients feel confident about making decisions for their financial future. She is a Certified Financial Planner™ and owner of Parkway Wealth Management, an independent wealth management firm in Boston offering investment advisory and planning services. After spending 20 years in investment management with “downtown” firms, Ellen founded Parkway Wealth to serve clients in an authentic way and offer personal financial advice. Her business has a focus on women, helping women feel more confident and informed. Today, women have more responsibility for the financial well-being of the household than ever, yet despite this increased role and responsibility, many women feel uncomfortable talking about money and investing.  Ellen works with clients to understand their questions, concerns, hopes, and fears. Financial planning is about freedom and choices. Ellen lives in West Roxbury with her husband Tim Turley and their three teenagers. An active community member, Ellen believes an integrated approach to “health, wealth, community” can build a strong foundation for a lifetime of financial well-being. (Investment advice offered through Private Advisor Group, a registered investment advisor.)

Health, Wealth, Community – It’s All Connected. Investment advice offered through Private Advisor Group, a registered investment advisor.