Bad News Beneficiaries for Non-Probate Assets

If your estate plan includes some non-probate assets, you are off to a good start, but complacency is the enemy of every estate plan, so don’t assume that you have all your ducks in a row just because you bought a life insurance policy years ago when your employer offered it to you as part of your benefits package. Non-probate assets only do their job, namely conveying property to your heirs outside of probate, if you list a beneficiary. A non-probate asset designated for no one is useless. Therefore, if you have listed a beneficiary, you have done better than if you have not listed one. Choosing a beneficiary for a non-probate asset should not be a hasty decision, though. A poor choice of beneficiary for a non-probate asset can cause as many problems for your family after you die as a poorly written will can. For help setting up non-probate assets and choosing appropriate beneficiaries for them, contact a Washington, D.C. estate planning lawyer.
When Non-Probate Assets Go Through Probate
Anyone who has experienced probate, even if they did not act as the personal representative of an estate, can tell you that probate takes a lot of the fun out of inheriting property from your relatives. It is not like in the movies, where, one day, you are just going about your business, and then a lawyer shows up and hands you a check, explaining that a relative you barely knew has left you an inheritance. If a relative of yours dies, and you are a beneficiary of the will, or if the decedent did not write a will and you are a close family member, you must wait until the estate settles before you can inherit anything. This means that you must wait through the payment of debts and taxes and the resolution of disputes.
Non-probate assets, such as life insurance policies, trusts, and transfer on death (TOD) bank accounts, go directly to the beneficiaries, without probate. If you don’t list a beneficiary, your estate becomes the beneficiary. This defeats the purpose of a non-probate asset. Even worse, some people unwisely list their estates as beneficiaries of non-probate assets.
When You Write Your Ex-Spouse Out of Your Will, but Your Ex Inherits Your Non-Probate Assets
If you change your mind about who should receive a non-probate asset, you can change the beneficiary; how you do this depends on what kind of non-probate asset it is. Just as you should review your will every year and make any necessary changes, you should also do this with your non-probate assets. Divorce does not automatically invalidate your ex-spouse’s status as the beneficiary of a non-probate asset. Likewise, estranged relatives can remain as beneficiaries of non-probate assets even if you write them out of your will.
Contact Tobin O’Connor Ewing About Non-Probate Assets
A Washington, D.C. estate planning attorney can help you set up non-probate assets and establish beneficiaries for them. Contact Tobin, O’Connor, and Ewing in Washington, D.C. or call 202-362-5900.
Source:
wealthyaccountant.com/2024/12/09/never-name-as-beneficiary/