Tax Season is Organization Season

It’s tax season. You’re probably getting your tax documents from your employer and your investments. You’re compiling them so that you can either send them to your accountant or use one of those online filing services. Since you’re already getting all of those documents organized, it’s a great time to check up on your beneficiary designations.

Most types of bank and investment accounts allow you to name a payable on death beneficiary (“POD”) so that if you pass away, that person will receive the funds in that account. When you receive a tax document from a financial institution, it’s a great time to make sure that institution has your correct beneficiary designations. Once you’ve checked your beneficiary designations, you should use those tax documents to make a comprehensive list of the names of the institutions and the corresponding account numbers. That list should be kept somewhere that your loved ones can access if something happens to you.

Keep in mind, though, that beneficiary designations can’t do everything that proper estate planning can. With beneficiary designations, you can’t or shouldn’t leave money to minors or adults with disabilities. If you have a living trust, your beneficiary designation is your trust so that all of the contingencies written into the trust can take care of those situations. If you have a will, please understand that your beneficiary designations will supersede your distributions in your will. For example, if your will says that your assets should be split equally between Ann, Bob, and Carl, but your beneficiary designation at the bank is Carl, that means that Carl is 100% entitled to 100% of that account after you pass away.

Need help navigating how your accounts and investments should be organized and coordinated with your estate plan? Make an appointment to talk to one of our attorneys so that we can make sure your intent is a carefully notated in writing.