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Titling Assets and Beneficiary Designations

Posted by attorney Martin Bearg

Many types of investments permit the owner to designate and specific individual or class of individuals (my children) to inherit the asset upon the death of the owner. It doing estate planning, it is very important to be aware of such designations, and in the absence of any such designation, to recognize that almost every contract provides that the asset will pass to the owner’s estate.

The assets about which I am speaking are life insurance policies, annuities, Individual Retirement Accounts,, 401(k) plan benefits, and 403(b) plan benefits. Bank and brokerage accounts can be held in joint names, leaving the survivor to inherit the entire account, or a “Pay of Death" account that results in the designated spouse, child or grandchild to inherit the account, bypassing what the owner may have stated and intended in his/her Will.

It is critical that you discuss beneficiary designations with a person who is helping you prepare an estate plan.

I had a client who had a Will prepared by another attorney. The Will provided that upon my client’s death, his assets would be held in trust for the benefit of his wife (provided she survived him), and upon the death of his wife, all that remained would go to the University of Pennsylvania.

All of the client’s assets were either owned jointly with his wife, or designated his wife as the beneficiary. The client/husband died first, which resulted in his wife receiving all his assets and the University of Pennsylvania receiving nothing for none of his assets passed under the terms of his Will (as probate assets). All of the client’s assets by operation of law to the surviving joint tenant, and by way of the beneficiary designations. Not his intent.

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