Nobody Asked Me -- But Here's a Little Info on Assets with Named Beneficiaries

When a person has died, it's easy for a non-professional executor to overlook assets that have what are called named beneficiaries because in general these do not go through probate. Assets with named beneficiaries can include (but are not exclusive to) banking and savings accounts, stocks and bonds, life insurance policies, and retirement plans.

When you enroll in an account, the financial institution usually sends you a document asking for the names of those to whom you want your assets to go after your death and in what proportion. You should always include successor beneficiaries.

Here are a few things to keep in mind: (1) Copies of the beneficiary designation documents showing who is to receive the assets should be kept in your financial files where the executor can find them. Also tell your executor where to look. (2) Review your named beneficiaries as you get older. Beneficiaries can die. Successor beneficiaries can also die. You'll have to name new beneficiaries. (3) The financial institutions holding your assets do not keep tabs on the obituary section of the newspaper. Beneficiaries are responsible to let them know and present the necessary documents to receive the assets.* (4) Make sure that the terms of your will match up with your beneficiary accounts. Don't name one person in the will and another person as the named beneficiary to receive the same asset. (5) In general, a surviving spouse who is not a named beneficiary on the account will not receive those assets. (6) If the document has no (living) named beneficiaries or no beneficiaries named at all (unlikely) the assets become part of the probated estate. (6) Retirement accounts are tricky and the SECURE Act, a federal law from 2019, can have an impact on your planning. It shouldn't cost much to contact your attorney for an update.

These are just a few things to consider and are not to be taken as legal advice. When considering the above points, always remember that state laws differ. And always check with your attorney if you have questions.

*A 87-year-old man had a rather large IRA account. After he died, his co-executors apparently didn't know about it. Three years later, the account was somehow discovered. Probate had to be reopened and the IRA funds added to the estate for distribution to the beneficiaries in the will. This indicated to me that either the account had no beneficiaries named (unlikely) or that the man had named beneficiaries who had died before him, which is more likely. His first wife had died 30 years earlier and he'd remarried. My guess is that he thought his current spouse would become the beneficiary without actually naming her.