Do You Know Who is Inheriting Your Assets?

In June, I read an article in the Wall Street Journal titled “His Ex is Getting His $1 Million Retirement Account. They Broke Up in 1989.” and it reminded me of the significance of beneficiary designations on financial accounts. The article details how in 1987 Mr. Rolison named his then girlfriend as the beneficiary on his work profit sharing plan. They broke up two years later, yet when Mr. Rolison died single and childless in 2015 she was still the beneficiary. Mr. Rolison’s ex-girlfriend from the late 80s is now pitted against Mr. Rolison’s brothers as to who should inherit the money. A court will ultimately determine who is entitled to Mr. Rolison’s $1 million retirement account, but no one will ever know his true intentions.

While this is an extreme result caused by not keeping your beneficiary designations up-to-date, it is a good reminder that beneficiary designations should be reviewed along with other estate planning documents. To understand the importance of beneficiary designations, it is critical to understand how they work. Many financial institutions, trust companies, insurance companies and brokerage firms allow the owner of an account or insurance policy to name a person, charity or trust that will receive the account holdings or insurance proceeds upon the owner’s death (the “beneficiary”). This beneficiary designation trumps the owner’s will and trust, if he or she has them, and the intestacy statutes of the owner’s residence. Therefore, it is imperative that beneficiary designations complement your other estate planning documents.

When you review and update your will, trust, durable power of attorney, living will and medical power of attorney, you should also review all of your beneficiary designations, especially those on accounts that have existed for many years. Such reviews should occur every three to five years or when there is a life event such as a birth, death, marriage or divorce in your family.

If you have any questions about beneficiary designations on your accounts at FineMark or anywhere else, please reach out to your Private Wealth Advisor for assistance.

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