Do you know who's getting your .....

Do you know who's getting your .....

Or why your estate may need a once-over!

By Debbie Gardner
PRIME Editor

It's a question no one really wants to think about.
But it's one we should all mull over every now and then.

Do you really know who's going to get your ... IRA, 401K, life insurance, accumulated wealth, or the care of your children (or those grandchildren you're raising) ... when you're gone?

It can happen to anyone

High-profile estate disputes, such as the custody of Michael Jackson's children (not to mention the controversy surrounding the provisions of his will), are in-your-face examples of what can happen if you die suddenly and your documents are not up-to-date.

But most people won't encounter such extreme situations when a loved one passes.

Most likely, their problems will be more in line with the ones I encountered while trying to close the estate of a dear aunt.

A will may list the wrong names or addresses of heirs because these people have married, divorced or moved.

Long-forgotten employer life insurance policies may list beneficiaries who are already dead.

Bank accounts may not list successor information that matches the wishes left in a loved one's will.

And myriad other details that were never reviewed once the will, policy, account or benefit was initially reviewed and signed.

So, how about your documents? Is it time for a once-over?

Things may not be the way you remember them
"We had a situation some time ago where a spouse died and the beneficiary [of an insurance policy] was the only child, who had predeceased the mother," Bill Scatolini, owner of Scatolini Insurance of Wilbraham told PRIME. "The husband thought he had a life policy on his wife and he was not the beneficiary."

Scatolini said he was able to help his client eventually recover the death benefit, but unfortunately the man still had to endure a "probate nightmare" and several months of correspondence with the insurance company before things were resolved.

And though this type of situation can happen, Scatolini said the worst offenders when it comes to neglected or misunderstood insurance policies are those that clients receive as an employee benefit.

"What I've seen in my time is that people have no idea what they have [for insurance] at work," he said. "We hear, 'I think I have this' or 'I think I have that' and the reality is, they had a brief overview [of the benefits] when they were going for the job, and then its never looked at again."

His advice: bring those work policies to an independent insurance agent for review, so you completely understand what that policy does and doesn't cover, how/to whom any benefits will be paid out, and what happens if you leave or get laid off.

"I'm 42 years old and I hear my peers say 'I'm all set, I've got four times or six times my value [through a work policy],'" Scatolini said. "But you're probably going to change jobs four to six times in your life, and that life insurance doesn't go with you."

He said, especially in today's economy, it's not only important to understand the policies you have, but to ensure that you have a small life policy that's separate from the insurance you get through your job.

Once you have such a policy, he said, you can always increase the value if you lose your work coverage.

"You may be in a job 20 years and get laid off and now you have no life insurance," he said. " And now, you may not be insurable because you have diabetes or cancer."

Do your will & beneficiaries match?
"A woman came in and told me that my will was much more expensive than the one she had had drafted [previously]," legal columnist Attorney Gina Barry told PRIME. "[But] when I went through her asset list I found that, based on joint ownership, she had all of her assets going to one child."

"Her $50 will wasn't worth the paper it was written on," Barry continued. "Because it wasn't going to carry out her wishes."

Fortunately Barry, an estate planning and elder law specialist with Bacon Wilson P. C. of Springfield, caught the discrepancy and was able to help the client correct her documents to reflect her wishes.

Barry's advice to readers don't wait for a significant life event a marriage, a divorce, the birth of a child or grandchild to schedule an estate plan review with your attorney.

As an estate planner, she'd love to have clients review the accuracy of their plans annually, but knows that's "not realistic."

"When you go in for the review, make sure that you bring all your documents with you, especially if [the lawyer you are seeing] didn't draft [your plan]," Barry said. "People's memory is not always that accurate; they may think that their Will is written one way, but the reality of what is written in the document may not be what their memory says it is."

The list of documents you bring along should include an updated asset list, or at least information about what you own and how you own it (e.g. jointly, with survivorship, with beneficiaries, etc.).

"Make sure that the structure of your assets is consistent with [your estate] plan," Barry said. "Make sure that the ownership and beneficiary designations [of assets] are consistent with the plan."

She said that certain assets, such as life insurance, retirement accounts and some stocks, will have provisions for you to select true beneficiaries, and that you need to make sure the information for those items is still accurate and consistent.

"Stocks and bonds can go either way, some are held in survivorship." she said. "What most people have trouble with is bank accounts [especially] when there is joint ownership [by a parent and one child]. The other children will need to prove that this account was established for convenience only, and should be divided."

And, when you've checked all your asset information, be sure to make certain that any updates or revisions that were [or are] drafted by your attorney were [or are] properly signed and filed.

"What you think is in your will may not actually be in your will," she said.

Who gets the IRAs and 401Ks?

Though Attorney Barry said an asset review is a crucial part of any estate plan review, financial advisor Tim Suffish, vice president at St. Germain Investments said his firm believes in being even more proactive when it comes to checking beneficiaries.

"We make it part of the routine when doing an annual (or semi) review with our clients," Suffish said via e-mail. "Just as we review the economy, the market, their portfolio and their overall financial situation . paying extra attention to where there are changes, i.e. job, retirement, relationships, value of portfolio . we review their beneficiary info on retirement accounts and 'TOD' accounts, to make sure they are as intended and are in sync with their wills and/or trusts."

According to Suffish the term TOD "stands for transfer on death."
"It is a essentially a beneficiary designation for a taxable (i.e. non retirement) account," he said. "So, similar to a [beneficiary designation] on an IRA, the TOD beneficiary would be considered before the Will."

And though Suffish said his firm encourages clients to review their asset distribution annually, he admits that there are clients who will go years without checking the accuracy of their beneficiary information.

"At least do it at a significant life event," he urged

What about your online accounts?

In a July 19 article posted on the Wall Street Journal Online, columnist Andrea Coombs cited the new estate planning dilemma posed by the popularity of online banking.

Many people, Coombs pointed out, now use password-restricted sites for secure online banking, bill paying, stock purchasing and even the storage of such personal mementos as photos and videos.

These accounts, she said, can be easily overlooked when making estate disbursements.

"Online accounts can be very difficult to ascertain, and even more difficult to access, when the owner of the account passes away," local elder law and estate planning attorney Gina Barry agreed.

In light of how much of people's financial lives now take place online, Coombs said it is critical that this list of assets and especially, the log in and password information, be included somewhere accessible to heirs or executors such as in a safe deposit box or in a list given to a lawyer or trusted friend.

"Maintaining a list of accounts with passwords makes sense, but it is also important to ensure that the list itself is properly safeguarded," Barry said. "In my list, I don't include the actual passwords, but I do provide a hint that someone close to me would recognize and be able to easily ascertain."

"Recently," Barry continued, "I have heard of a company that provides you with an online 'vault,' where you can put all of your information, including copies of your estate planning documents, in one place. Of course, even with a service such as this, it will only be as good as the information put into it."