We have never had so many clients in one week reach out to us with questions regarding their beneficiary designations and what they should do about their wills and trusts. These issues must really be on your mind and you must be worried about your family's future if you should become sick with COVID-19. So, let's do a quick review of some things for you to think about:
1. First, let's assess where you are today.
All of our clients can do this by logging onto your own personal website and then clicking the reports button and looking for the file that says life insurance report. The above video shows you how to do this. By the way, this is a fictional client so all of this information of course is just for demonstration purposes. The key thing you want to look for here is who the primary beneficiary is and who the contingent is. This way, if your primary beneficiary predeceases you, then your life insurance proceeds would be divided among your contingent beneficiaries.
2. Look at your retirement accounts.
Each retirement account will also have a beneficiary designation. For the accounts that we’re managing we can get a copy of these to you so let us know when we can print up a report and send them out. For accounts that we're not managing you will have to reach out to the custodian and ask them to identify for you who the beneficiaries are and you should also check with your HR Department to see who you have listed as a beneficiary on your retirement accounts.
3. Check on your brokerage or liquid accounts.
This can include your checking accounts, savings accounts, and of course the accounts we are managing for you at TD Ameritrade. In general, when we set these accounts up, we like to list a person as your POD or TOD. POD stands for Payable On Death, and TOD stands for Transfer On Death. What that means is at your death, accounts that are held just in your name would go directly to the person you've listed as payable on death and would thereby bypass probate. (Note: This is just for an account that's individual in your name.) Joint accounts would go to the survivor and then at the survivor’s death it would go to the POD or TOD designation. Once again, you can reach out to us if you're concerned and we can tell you who we have listed as POD on your brokerage accounts. If you don't have anyone listed this would be a good time to add someone.
4. Beneficiary designations will trump your estate plan, your wills, and your trust.
It's very important that you make sure that all of your estate planning documents are coordinated.
5. Consider whether or not you want to make your children a contingent beneficiary, particularly if they are minor children.
My experience has been there are very few children in the world who can inherit and then properly manage millions of dollars when they turn 18. This is a situation where you want to make sure that you have a revocable trust set up so that you have a responsible trustee that can be managing those assets for the benefit of your children until they reach a responsible age. When I have my attorney’s hat on and I'm doing estate planning for clients, we very rarely will have the children get all of their inheritance at once. Usually, through the trust, they will get the inheritance at various ages (ie. they might get a fourth at 25 years old, another fourth at 30, and the remaining half at 35.)
6. Finally, this is a good time to make sure your wills and trusts are up to date.
We had such a positive response to last week's webinar, we decided to host this same webinar, this Saturday, March 28th at 9 am CT / 10 am ET to answer questions about the Coronavirus and how it is impacting your financial future.
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Katherine Vessenes, JD, CFP®, is the founder and CEO of MD Financial Advisors who serve 500 doctors from Hawaii to Cape Cod. An award-winning Financial Advisor, Attorney, Certified Financial Planner®, author and speaker, she is devoted to bringing ethical advice to physicians and dentists. She can be reached at Katherine@mdfinancialadvisors.com.