Stautz Law

Tag: Beneficiary Designation

  • When You Don’t Need a Probate Lawyer

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    Good morning. It’s Andy Stautz at Stautz Law, and I am back for another talk about Indiana estate planning and probate topics. Today, I’m telling you about when you don’t need a lawyer.  

    So this one’s great because, you know, instead of saying, oh no, I need a lawyer, that’s scary, you know, it’s going to cost money, whatever. Here’s when you don’t need one. Specifically in the probate context, we’re just talking about probate here.  

    General Rule: You Need a Lawyer for Estates in Probate Court

    If someone dies, you need to do something with their property. Usually that’s where you start thinking, okay, yep, we need to do a probate. And in most of the counties I practice in, you know, here in central Indiana, broadly defined, the local rules usually require that you have a lawyer if you’re going to court. So most of the counties around here don’t want you DIYing an actual probate case in court.  

    But: You Don’t Need a Lawyer if the Estate’s Not in Probate Court

    But here’s when you don’t need a lawyer. You don’t need a lawyer if you’re not doing a probate. So for instance, if a person sets up designated beneficiaries on all of their bank accounts, brokerage accounts, life insurance policies, and that’s all the property they have, then that’s all non-probate transfers. We’ve talked about this in other videos. I will link them. All those non-probate transfers, you don’t need to go to the probate court. Instead, you’ll get a packet of paperwork from the brokerage company, from the bank, from the life insurance company. And it’ll have instructions for you. It will say, you know, here’s how you, you’re the designated beneficiary, here’s how you claim it, and you follow the instructions, and you just deal with . . . the company. And as long as you do that paperwork right, you got to read the instructions and follow the instructions. But as long as you do that paperwork right, you don’t need a lawyer for that.  

    Obviously, if you are having trouble with that paperwork, you can call me and I will certainly represent you as you do that. But you don’t necessarily need one because you’re not in front of a court.  

    Trust Administration

    Okay, so same thing with, for instance, a revocable trust-based plan. If the decedent had done some good estate planning beforehand, transferred all of her assets into a trust, had a successor trustee who knows what’s going on and is ready to take up the job, again, you bypass probate, trust administration carries on just like it was. You don’t need would most trustees benefit from having a lawyer? Probably at some point, but again, a diligent successor trustee who’s been shown the ropes already in advance with good planning. Again, you can administer it. You can administer a trust without needing a lawyer or needing new lawyers.

    DIY Indiana Small Estates

    Okay, and finally, there’s the situation of a small estate affidavit, okay? This is for estates of less than $100,000 that don’t include real estate, generally, okay? Just, we’re not talking about all the details, but, so for certain small estates, if a person died with little property, almost no property, You don’t need a lawyer to fill out a small estate affidavit and present it to the bank or present it to the BMV.  

    And the BMV has a form, like has a title transfer form where you can say it’s a small estate. And legal aid or one of the Indiana legal aid providers also has a sample small estate affidavit. And I’ve got one kicking around somewhere. So I might link that.

    So this is kind of like the designated beneficiary situation where, if you’re using the small estate procedure, you’re not going to the probate court. So you don’t need a lawyer to represent you in court, but you still need to like understand what you’re doing, right? You still need to be able to fill out the form correct, like read it, fill out the form correctly, you know, go present it to the bank.  

    And obviously when you do that, you are also taking upon yourself the responsibility of dividing the property up after you gather it. Okay. So the small estate affidavit, you know, it needs to be a small estate. It probably also should be somewhere, something where the heirs trust each other, right? Because there’s no court supervision. But that’s a separate talk. Okay.  

    And again, with a small estate affidavit, you know, is it DIYable? Yes. right? There are forms out there, you can use them. But if you run into trouble, if the bank is recalcitrant or if you’re just worried about doing it wrong or, whatever, I help people prepare those all the time. I mean, that’s a smaller scale representation than a full probate, but happy to help.  

    Conclusion

    So that’s kind of three scenarios to get your mind going on. Okay, sometimes it’s possible to administer an estate without needing to hire a lawyer. So if you choose that, you know, Good luck. I think you can do it with diligence.  

    If you get into more complicated situations and you run up against something, that’s what I’m here for. I help people with these issues every day. So you’re on my website, but give me a call or an e-mail, and I’d be happy to talk about potential representation in the future. Hope you enjoyed this general informational talk. That’s all for today. Bye.

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  • Transfer on Death Deeds: Partial Interests

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    Good morning, folks. It’s Andy Stautz with Stautz Law. I’m back today with another talk about an Indiana estate planning and probate topic. Today we’re talking about transfer on death deeds of partial interests, by which I mean also joint tenancies.

    Overview of Transfer on Death Deeds

    So I’ve talked before about Indiana transfer on death deeds, You should go look at that video if you haven’t seen it yet. Basically, a transfer on death deed is an instrument, a deed that you record on top of your existing house deed or property deed, and it adds an automatic beneficiary to your deed. That way, on your passing, there’s a non-probate transfer: which means it’s automatic, it happens right away. You don’t need to go to probate court.  

    Automatic non-probate transfer of the property from you to whoever you named.  

    (But it doesn’t create any, you know, present ownership in your beneficiary, right? So they can’t do anything about it. You just put the name on there.)  

    Scenarios with Partial Ownership Interests

    Okay, so that fundamental instrument is great. The most common scenario is definitely people who own their house and are giving it to either their kids or a family member. And usually people own their real estate fee simple outright. They just, they own it, it’s theirs.  

    Sometimes though, you see properties, especially family properties that have been passed down, or business properties that were acquired as part of a group of investors, where you’ve got a partial interest, some sort of joint tenancy. And again, I’ve got a separate, more extensive discussion of how joint tenancies work.  

    Transfer on Death Deeds and Partial Interests

    But you know, if you’ve got a one quarter share in a property, you know, or you’ve got a joint tenancy with someone else, Can you still use a transfer on death deed?  

    The answer is yes, you can use a transfer on death deed for partial interests, just like you can for like a complete fee simple interest, and the rules for that are right in the transfer. on Death Property Act. So that’s Indiana Code 32-17-14-11(e), [edit: I misspoke, it’s subsection “e” not “a”] and then it’s a list of one, two, three, four, five, six of what happens in different situations. So you can go look at the law for yourself.  

    I think the interesting ones are a tenancy in common. That’s where you just own some fraction. If you put a transfer on death deed on your fraction, it’s just it operates as to your interest. I.C. 32-17-14-11(e)(4). So if you own a quarter of your property, you can put a transfer on death deed for your quarter of the property. Doesn’t affect anyone else.  

    With husbands and wives, spouses who have this special “tenants by the entirety,” you can’t do it unless both spouses join. I.C. 32-17-14-11(e)(1). So you can’t just decide one day to add a beneficiary designation for like you, the husband’s beneficiaries or whatever, both spouses have to agree.  

    But the rules is different for a joint tenancy that’s not spouses. It’s for a joint tenancy, which often includes this right of survivorship, pretty cool if you’re the survivor, I suppose, recording a transfer on death deed breaks the joint tenancy and turns it into a tenancy in common. I.C. 32-17-14-11(e)(2). So you lose the right of survivorship. That’s quite a little trick in the law there.  

    It’s never come up for me yet, but I’m young. Maybe it will someday. So be careful and look at it.  

    Conclusion: TOD Still an Option

    But just because you own some fractional interest in a property doesn’t mean transfer on death deeds are off the table. And that’s good because they’re a really flexible planning tool. I’ve talked elsewhere about how and when you might want to use them, but the type of tenancy you have doesn’t necessarily stand in your way.  

    So if you want to talk about this or any other Indiana estate planning and probate topic, give me a call or e-mail. You’re on my website. You’ve got my contact information and I serve, you know, central Indiana and especially points south, so Indianapolis, Marion County. Greenwood, Johnson County, Montgomery County, all of that, Shelbyville. So give me a call and we can talk more, but I hope this general information of Indiana law was useful to you. Bye now.

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  • To Do List for New Parents

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    This talk contains a LOT of references to estate planning concepts that you may or may not be familiar with. In order to keep it to a reasonable length, I didn’t explain every concept I mention. In the transcript below, I’ve tried to link out to my other resources on each topic. So you should be able to follow along and click through wherever you need more context!

    Enjoy!  

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    Hi folks, it’s Andy Stautz at Stautz. I’m back for a follow-up talk about an Indiana estate planning topic. So just before this, I recorded a talk on why new parents need a will. So you should watch that or read it. This follow up is more of a to do list. Like OK, what all is on your plate here in terms of estate planning?  

    Item #1: Get a Will

    OK so, you know, “get a will” is a pretty easy piece of instruction: either call an estate planning attorney or go to one of the do-it-yourself things and do it yourself. (At your own risks there.)  

    Item #2: Get your ancillary documents: POA, Healthcare, etc.

    Also, though, there are some other related things, so #2: think about your ancillary documents. So not the will itself, but you know, financial power of attorney, a healthcare advance directive, right? It makes sense to think about all of it at once and as one package. I’ve talked about those documents elsewhere. I’m not going to go through what they do right now.  

    Item #3: Talk About Your Values

    That’s one thing: to do a values conversation, right? When you’re doing planning, you need to talk to your spouse. And your children. I mean, obviously we’re talking about a situation where you’ve got a baby, so maybe not there, but you know, talk to your spouse. What do we want it to look like? You know, what are we worried about? What can we prevent? What are our values? End of life decisions. Worst case scenario decisions: who raises our kid if we’re gone decisions? You know. Make it a date night. Mom can drink again so you know, open a bottle of wine and sit down and talk about it. It will be good.  

    Item #4: Check Beneficiary Designations

    Other non-will, non-probate non-”other documents.” But just like getting your property affairs in order. So a big one is beneficiary designations on your retirement accounts. For a lot of young couples I know, for us, right, our brokerage account, you know 401(k), IRA, that’s the biggest single piece of property we’ve got. And if you’ve got a beneficiary designation, it’s not a probate asset. It’s not controlled by your will.

    So log on to your portal, your vanguard, your fidelity, whatever, and make sure it’s correct. Because some of those providers automatically, like, cancel your old designations if you get married or if you have a kid, but not all of them do so, so go check. Make sure it’s who you want it to be. You know, probably spouse as your primary, and then your backup might be, I don’t know, your parents, if they’re still living. You know, you can do it to a trust if you’re doing sophisticated planning, but we’re just talking like basics. Make sure it’s correct. Same thing with life insurance. If you carry life insurance.  

    Item #5: Figure Out How Your Assets are Titled

    And then the other thing would be, relatedly, organizing title. Make sure you know how you own things, so if you if one of you owned a house before you got married, you know, are you both on the mortgage? Are you both on the deed? What about your cars? Same thing. Because anything you own jointly with your spouse also avoids probate and just goes to your spouse. So you might want that, you might not want that. I’ve talked in other videos about how joint tenancies work and what they might do or not do.  

    How Much Work Is This?

    But just kind of, in my mind, when I tell new parents “get a will, you need a will,” it’s not just, you know, your three page document with your signature on it. It should be a good reminder to kind of, like, get everything in order, right? Just sit down and do it. Really. It might only take a few hours. Honestly like 2 hours maybe. Call an attorney. Hey, when do you have a consultation? next week? you go to that. That’s… call that one hour. And then you go home and you do your homework. And you fix all your beneficiary designations and you make a binder. Let’s call that another hour, and then you come back and then you sign the will and your documents. Right, like two hours, 2 1/2 hours.  

    And it will save you tons and tons of time and money and stress. UM. Whether or not you “need it,” right? It’s being able to sleep. It’s knowing. OK, my kids are fine. I’ve done what I can do to make that easy for them.  

    Conclusion: You’ll Feel Better, I Promise

    So that that’s kind of your list, you know, get the main documents, get the ancillary documents, fix your beneficiary designations, make sure you know how things are titled, and talk about it with your spouse and with, you know, if you’re designating a guardian like. Hey, would you raise my kids, if I’m gone, that kind of thing.  

    So do those things. It’ll feel good and you know, people are relieved to get it done and it’s the responsible thing to do so. Hope that makes it easier to kind of see. OK, that’s what you’re dealing with. That’s how long it will take. Don’t put it off. Alright, give me a call if you need help with any of that. I hope that was helpful. Bye for now.

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  • Video: Estate Planning after Divorce

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    Hi folks, it’s Andy Stautz at Stautz Law. I’m back today talking about estate planning. Today’s topic is estate planning and divorce. Divorce is a big moment in estate planning because it really changes the legal priority of your relationships, right? Your spouse was number one person in the eyes of the law — your ex-spouse or soon to be ex-spouse, you know, you’re changing those relationships. So during a divorce, immediately after a divorce, you need to revise your estate plan to account for those changes.  

    So the default rules try to handle it, right? because they know you don’t want your ex-spouse being the same person in your plan, in your property disposition, as they were before.  

    But it’s not complete, right? There are some things that happen, like, accidentally that you really need to pay attention to. 

    So. Your ex-spouse, upon divorce, your will provisions in favor of your former spouse are cancelled. I.C. 29-5-1-8. Same thing with revocable trusts, canceled. But not with irrevocable trusts! I.C. 30-4-2-15. And not with life insurance designations or retirement account beneficiary designations. But then transfer on death property deeds, yes, the law does automatically cancel those. I.C. 32-17-14.

    You know if you had an estate plan where your spouse was everything. It’s going to go to pieces after your divorce because some of them will automatically be cancelled, but some of them won’t be. So you should revise that. And make sure, you know, it’s all undone. Everything, everything you want undone is undone.  

    So I’ll try to put those citations you know in the. In the text version of this. But it’s oddball, so you know, you can’t just assume that “Oh, we’re divorced now . . . my ex-spouse doesn’t get any.”  

    The other big point to keep in mind is that the law, the default change in the law, only happens on the date of the dissolution decree or annulment. So while your divorce is pending, you know, you probably don’t want your soon to be ex-spouse, you know, to be in the same position. But the law hasn’t caught up to your family situation yet, so especially if your divorce is going to take a while or you’re worried about, you know, things happening in the interim, you know, revise it in advance. OK.  

    And lastly, even where the law automatically takes care of straightening things out, it’s still good form to, like, go back, restate your will, restate your trust. And take it out. You know, update it. Take out the references to your former spouse as a beneficiary. Note that the marriage existed, but ended in divorce.  

    Is it legally necessary? No, maybe not, but it’s protective of you. It reduces the risk of a conflict later and conflicts are expensive. So you should be revising everything anyway.  

    And lastly, you know, you probably want to rethink your entire scheme of disposition after your divorce, because now instead of being married and jointly responsible for any children or jointly responsible for your parents, your relatives, whatever, it becomes kind of “just you,” in a sense. So maybe it’s time to set up a trust for your children, because you can’t assume that your property is going to your now ex-spouse. So, you know, you might need to use documents in a different way… to sort of stand in for what you used to rely on this other person for.  

    So if you’re getting a divorce, you should think about your estate plan. You should get one if you don’t have one. You should make the revisions. To make sure it works like you want. So that’s quick overview. Your situation is almost certain to be special and different, so that’s why we have initial planning meetings. You can book online. You can call me, and I’d be happy to talk about what you specifically need 

    That’s all for today. Thank you very much and hope to talk to you soon. 

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  • When Should I Revise My Estate Plan?

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    Hi folks, it’s Andy Stautz at Stautz Law. I’m back with another talk on estate planning topics and today’s topic is when to revise your estate plan, or “when should I revise my estate plan?”  

    You know, there’s no expiration date on your estate plan documents. Once you get them. But. Big events in your life should probably affect how you’re planning about your property and and your healthcare decisions also  

    In general, let’s divide this into three  categories. We’ve got family events, we’ve got property events, and we’ve got just time.  

    So. Family events: If you get married, if you get divorced, if you have children, especially for the first time, but also subsequent children. UM. You know your if your parents. If your parents pass. Especially, you know, especially if you’re younger. All of those family events can, can and should prompt you to think about your estate plan again. And that doesn’t necessarily mean making an appointment with your estate planning attorney. It just means think about it: “OK. I just had a kid, you know. Does that mean it’s time to, uh, set up a revocable trust? In case something happens to us during what you know, wow, your son or daughter is under 18.” Yeah, maybe. Right?  

    Marriage for sure. Because your spouse instantly becomes number one in the eyes of the law in terms of your, your property and your healthcare decisions. So. That could be good. That can be bad, but it’s something to think about. Same thing with divorce. (I’m going to make a separate talk about that because it’s its own, you know, it’s complicated enough.) 

    So all of those. Events something big happens in your life. Great. Congratulations. (Probably, or sorry, the case may be.) But you know, when something happens, it’s it’s time to stop, reflect, take stock. You know, hopefully you’re doing that emotionally anyway. But you know you can do it emotionally and also think about it. Think about your legal needs too. UM. You know, I’m a lawyer. Of course I say that. So that’s one category.  

    The other would be property events, so. If something in your. Assets changes big time. That’s probably time to just check up on your estate plan and make sure it’s it’s covered. So buying or selling a house. Uh. Inheriting a big sum of money. Coming into a business interest that you didn’t have before. UM. You know, even things like appreciation of your preexisting assets might be enough. Where you know if you’re young, you don’t have much. You’ve got a basic estate plan. It’s like, OK, well, now that I’ve got, you know, $1,000,000 in my retirement account, Do I need a different plan? And again the answer might be no. But it’s worth, it’s worth thinking about and you know, come in for a planning meeting or a revision meeting. I’m certainly willing to do that for my clients. Other other attorneys are too, I’m sure. So that’s kind of property events.  

    The other is lapse of time. So even if nothing’s happening in your life, you’re just cruising along. Everything’s good. You’re just enjoying your days. You know, every every five years, every 10 years. Yes. Check in because the law might have changed. You might have changed, right? Your priorities in terms of what you’re trying to do.  

    It’s such an uphill battle, I think, to get people to think about estate planning for the first time. Umm. Because it’s tough conversations, it’s tough topics. But once you’ve got the documents, once you’re ready, you’ve got a plan. It doesn’t stop there. Hopefully it’s a little less of an ask, going forward, to revisit them and make sure the plan still works for you. 

    Kind of recapture those feelings. Remember how good you felt the day you finally got your plan in place? it’s like OK. Well, you know. Come back to it to make sure it still works as your life changes.  

    And just, personally, as a lawyer is my favorite part of my practice. Is hearing about clients’ lives and what they’ve done with themselves and what their goals are. So hopefully it’s a good conversation to have.  

    Now you know some of the big trigger points. And so if you’ve had any of those recently schedule a call or just you know sit down and think about it. You know, make sure you’re in a good spot. So my contact information here at the end of the video, you can always book online or give me a call. And I’d love to talk to you. Thanks. Bye. 

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  • Video: Estate Planning for Young Adults (Part II)

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    Hi folks, it’s Andy Stautz at Stautz Law. Today I’m back with Part 2 of our discussion on estate planning for young adults.  

    So in Part 1 I talked about kind of the trade-offs, the balance between, you know, the complexity of your family and property situation versus the cost and time of doing formal estate planning.  

    Today we’re talking about specific situations, some like real basic plans.  

    So if you’re a young adult, let’s say you’re 30, you’re not married, you have no kids. Your plan could be really simple. It can be, you know, beneficiary designations on your retirement account; transfer on death deed for your House; and then a will to just take care of whatever is left. That way the bulk of your property is going outside of probate. You can probably use the small estate affidavit for the rest. Great.  

    As soon as you get married the situation changes. Your spouse becomes, you know, number one person by default on your healthcare representative. Your intestate heir. So. For a married couple, the same scheme can work for property. Healthcare decisions probably made mutually. Uh, but it’s just something to keep an eye on. You know, when you get married, that’s a big change because your spouse instantly steps in to, like, all the roles.  

    (So… I’ll probably do a follow up video on when to change your estate plan or like when to revise. Start thinking about it and marriage is a big one. So is divorce. So is having children.) 

    The same scheme can work for a married couple, you know, just beneficiary designations take care of a lot if your property is mostly retirement accounts and house.  

    Uh. Situation changes if you have rental properties. Because you should have those in an LLC (If you don’t talk to me about that separately.) Your interest in an LLC is a probate asset unless you do more, so that’s probably trust time.  

    It’s also trust time if you have kids, because once you have children. They become your… or you know they have an intestate share right away, even though they are minors and can’t. You know, do anything with it.  

    So if you don’t want to accidentally leave a ton of property to children requiring a guardianship, if there’s no surviving adult responsible. And if you don’t want to leave a bunch of money to someone the day they turn 18. (Usually, Yikes, But, you know it’s your own decision to make, I guess) A revocable trust makes tons of sense for married couples with children because it lets you set thresholds for distributing your assets to your minor children over their lifetime. You can set up discretionary educational trusts in your revocable trust. So you know, usually that’s worth it. UM. It’s a lot more flexible, a lot more private, a lot easier to administer than a testamentary trust, which can go in a will  

    (Kind of old school that some people will have a will and then the will says. Oh by the way, if my beneficiaries are minors then you know create this trust for them. It’s like, well, it’s better to have that done beforehand because then you avoid probate, you keep some privacy. And you can you can be a little more elaborate in your planning, then, too. . . . .Although there’s no theoretical limit, I guess, even in a testamentary trust, but… Personal preference I suppose. Anyway, that’s an aside.)  

    So those are some basic those are some basic schemes you know for single people. UM, it can be easy. Hopefully you can do it, most of it, outside of probate and then just a simple will. For married couples, and especially married couples with children, it makes sense to get some trust in place there.  

    And again, business interests are a biggie, so if you’re, if you’re running your own business, that needs special thought and that instantly puts you into the “Yep, have a plan.” Versus just a W2 wage earner. Or two.  

    So I hope you’ve enjoyed this brief overview. Obviously everybody’s personal situation is different, so come in for your planning meeting. We’ll talk about your situation and then based on what you need. You know that’ll that’ll determine. Where exactly we go from there, but that gives you an idea. Hopefully that’s enough to go on and start reading about if you want more education, but you can book online here on stouts law or you can just give me a call. Love to hear from you and talk to you about that. Thanks and bye.

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  • Video: Estate Planning for Young Adults

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    Good morning, folks. It’s Andy Stautz with Stautz Law and we are back today with another estate planning talk. Today’s topic is estate planning for young people, young adults, really. Because I’m a young adult, lots of my friends are young adults and so I get the question all the time: “Hey, Andy, if we came in to you for an initial planning meeting, what would you recommend? What do we need to be doing right now?”  

    You know, obviously that’s a complicated question because everyone’s situation is different. But there are enough similarities between young adults that it’s worth talking about the the basics.  

    So consideration #1 is: What is your property? I mean, how much do you have to protect and is it worth going to any trouble about it — because you know maybe you’ve been in grad school through your 20s, or maybe you’ve been, you know, kind of finding yourself, trying different careers; who knows what you might be 30 years old and have no assets. Well, then, you probably don’t want to be paying an estate planning attorney to come up with a plan for you, because why!?  

    But as you start getting more, I think you need to keep an eye on that because some, some, some young adults, married or unmarried, get into their 30s and OK, you’ve got some retirement accounts. Maybe you’ve got a house, you know, rental properties, if you’re into that. So as you start amassing wealth, as you start doing well for yourself, that’s great. And that’s when it starts, you know, OK, you probably don’t want all of this escheating to the state or accidentally going somewhere you don’t want, or costing your family tons of money in probate. So that’s trade off #1 

    #2 is kind of: “OK well, how how does your situation relate to the default rules?” Because as as I’ve discussed in my other videos, you know, “do you need a will?” You know, “do you need an estate plan?” There are default rules. There is intestacy. There’s a priority of healthcare decision makers, so. If you’re unmarried and childless. You know, maybe those default rules do a pretty good job for you.  

    If you’ve got preferences that are different, you know, especially if there’s conflict with your family — because If you are unmarried and childless, your parents are still kind of your number one beneficiaries and your number one decision makers if you’re incapacitated –so you know if you want to avoid that for whatever reason, you know, then that that weighs in the balance in favor of, “OK, you need some deliberate estate planning.” And I’ll cite the I’ll cite the actual law in the written version of this, just so you have it.  

    So that’s kind of Part 1 of the discussion is how much do you have to protect and how do your preferences relate to the default preferences? Because if you don’t have a lot and your situation is well handled by the default rules. You know, what’s my recommendation for your estate plan? Not a lot, you know. Making a will if you can afford one, making sure of your beneficiary designations are a big one. You know, if your only asset is a retirement account, it’s like OK well. Go on your own. Make sure the beneficiary designation is who you want it to be. You can do that yourself. You don’t need to… You don’t need to pay anyone to do it.  

    Yeah, so closing thought for today then is, yeah, the more complex your situation gets, the more property you amass, the more it’s worth it to to sit down and have a planning talk. And. That’s when the the the balance starts to come out in your favor of. OK, yeah, it’s an upfront cost you need to budget for it. You need to have free cash flow to meet the planning expense. But it’ll, you know, the more property we’re talking about, the more you’ll save on the back end and you know, the better that works out for you.  

    So those are big considerations. That was Part 1 of this talk. I’m going to break it into two parts and then Part 2, we’re going to talk about some specific dispositions and planning recommendations that I’m often making. So stay tuned for that. Bye now.

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  • Talking About . . . Coordinating Beneficiary Designations

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    Hi. It’s Andy Stautz with Stautz Law and we are back for another quick informational chat about basic estate planning topics. Today we’re talking about beneficiary designations and specifically coordinating your beneficiary designations.  

    So if you’ve seen my previous videos or read elsewhere, you know that one really simple, easy type of planning technique is just to name a beneficiary on a retirement account; a life insurance policy; or I include transfer on death deeds because they’re basically a beneficiary designation. And what these mechanisms do is pass the property involved (the account, the policy, the real estate) automatically outside of probate. To [whomever] you named as the beneficiary on the instrument or on the account. The nice thing is it’s outside of probate. And for many cases, you know, if you’ve got an account at Vanguard or Morgan Stanley or Schwab, you can do it yourself. [You] don’t even need an estate planning attorney to get it set up for you.  

    The danger is that you do something accidental. So one common scenario is someone has a retirement account and they put. . . . one of their children as the beneficiary on the retirement account and they put another child as a beneficiary of a transfer on death deed. And they say, great, my planning’s done. And perhaps the retirement account is worth $100,000 and the House is worth $100,000. And they think they’ve split up their estate. And they’re good to go.  

    Well, what happens when 20 years later? You know, they have a long, healthy life. The assets in the retirement account keep going up. The House appreciates and you know at time of death it comes time to distribute the assets and all of a sudden one kid gets a half million dollar retirement account and the other one gets the same house worth whatever it was worth all along. Or the other way around. 

    You can end up with unfair distributions that go against your initial wishes if you don’t coordinate your designations with your whole estate plan.

    You can end up with unfair distributions that go against your initial wishes if you don’t coordinate your designations with your whole estate plan.

    So one way to get around that is just revise them often. But that’s pretty, that’s pretty, pretty low tech. And it requires you to stay up to date on these things, and most people don’t want to do that. Most people want to have one good conversation with their estate planner. Get their plan done and check it off right. Yep, done. And there’s a lot to that.  

    So there are there are different ways to handle coordinating beneficiary designations. One easy one is to designate a trust. (If that’s allowed by your bank or retirement account) That way you can write more specific instructions into the trust instrument or. Sort of put everything into one pot and distribute from there, rather than hoping that all the different accounts end up equal or close to equal. And then there are more sophisticated ways, too.  

    Or if charitable interests are part of your plan, that can be a great way to do it. But in any case, the thing to remember about this discussion is beneficiary designations are simple. They’re great. But you need to have a plan for how they’re going to work together and make sure that your estate plan . . . works like it ought to, even if your circumstances change over time. 

    So. 

    If you need help with your situation, you should call me or book an appointment online, on here on the website. But again, Andy Stautz for Stautz Law. Thanks for watching and I hope we’ll be in touch soon.

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