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Estate planning and beneficiaries: Potential outcomes

For many in New Jersey, the act of creating a comprehensive estate plan brings about a sense of relief in knowing that these matters have been addressed. With the right degree of effort, estate planning strategies can work wonders in ensuring that one's wishes are followed when the time comes. It is important for individuals to understand, however, that simply creating a will is not a catch-all solution. Many assets can still pass to others upon one's death if the proper precautions are not taken.

The most common way for assets to be distributed in direct opposition to a will is in the case of accounts that have named beneficiaries. These accounts can include retirement accounts, investments, life insurance and more. At the time the account was set up, the holder was asked to name a beneficiary. That designation will stand and will "trump" provisions laid out within one's will.

Take, for example, a woman who named her former husband as the beneficiary of her life insurance policy. If she remarries, she might draft a new will that leaves all of her assets to her new husband upon the occasion of her death. However, nothing in the will can change the fact that some of her accounts list her former husband as beneficiary. Assets held within those accounts will pass directly to the former spouse, outside of the probate process.

This may seem like a minor detail to include within one's estate planning checklist, but all New Jersey spouses should take the time to check their account documents to ensure that the proper beneficiaries are named. Relationships shift over time, and it is not uncommon for individuals to forget about smaller or infrequently used accounts. Checking beneficiary information is an essential part of creating an estate plan that reflects one's current needs and desires.   

Source: wmur.com, "Money Matters: The trump card of estate planning", Marc Hebert, May 21, 2015

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