When a Will Isn’t Enough | | SunTrust Resource Center

Estate Planning

When a Will Isn’t Enough

Why Keeping Your Beneficiary Designations Updated Matters

When a Will Isn’t Enough
 

You’ve likely done a fair amount of thinking and planning around who should inherit what in the event of your death. You may have even taken the time and care – not to mention expense – to articulate those wishes and desires by stipulating in a Will precisely how your assets should be distributed. Unfortunately, it could all be in vein if you make the common mistake of failing to update your beneficiary designations.

For most of us, aside from our homes, the lion’s share of our wealth is held in retirement accounts (e.g., pensions, annuities, 401k plans and IRAs) and perhaps a life insurance policy. What very few people understand, however, is that when it comes to assets like these that pass to heirs outside of probate, beneficiary designations take absolute precedence over any and all provisions made in your Will.

From joyous occasions such as a marriage or the birth of a child, to difficult and painful events like divorce or the death of a spouse, life changes are inevitable. But each change also brings with it a need to reassess your plans to ensure they reflect your wishes.

Having a bad heir day

In Kennedy Estate v. Plan Administrator for the DuPont Saving and Investment Plan, the U.S. Supreme Court ruled that an ex-wife who specifically waived her interest in her former husband’s retirement savings plan as part of the divorce decree was entitled to his entire account value ($400,000) upon his death because the husband, assuming the divorce decree would be binding, had failed to change the plan beneficiary to his daughter who was his sole heir.

And case law is littered with a multitude of other high court rulings where intended heirs have been effectively disinherited because of outdated beneficiary designations. From young workers who initially name their parents as retirement plan beneficiaries and subsequently never update the designation when they marry, to remarried widows/widowers who intend to leave their retirement plan or insurance policy assets to their children from the first marriage, but the beneficiary was never updated from the deceased spouse, so the assets all go to the new spouse.

Avoid the pitfalls

Estate planners typically recommend reviewing your retirement account and life insurance policy beneficiary designations at least every couple of years (or anytime an important life event occurs). Often, you can conduct a review and make necessary changes in a matter of minutes, as these forms typically can be accessed and submitted online. Consider adding a secondary or contingent beneficiary in case the primary beneficiary dies. And, if you decide to designate more than one primary beneficiary, make sure you indicate what percentage of the assets should go to each.

In addition to making sure your assets are distributed according to your wishes, designating individual beneficiaries assures that those assets will go directly to the individuals without having to go through the cost and delays associated with probate. And you just may realize that the person named on the beneficiary form(s) for your IRA, annuity or qualified retirement plan isn’t who you thought or wanted it to be.

Check in with your SunTrust Investment Services, Inc. Financial Advisor. He or she can help you determine how to do a beneficiary review.

For more information about retirement, investing, and financial planning, consult with a SunTrust Investment Services Financial Advisor or learn more how SunTrust can help you with your retirement and investments needs.

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

Related

Investment and Insurance Products:

Are Not FDIC or any other Government Agency Insured   Are Not Bank Guaranteed  May Lose Value 

© 2018 SunTrust Banks, Inc

equal housing logoSunTrust Bank is an Equal Housing Lender. Member FDIC

equal housing logoEqual Housing Lender. SunTrust Mortgage, Inc

SunTrust, SunTrust Mortgage, SunTrust PortfolioView, SunTrust Robinson Humphrey, SunTrust Premier Program, AMC Pinnacle, AMC Premier, Access 3, Signature Advantage Brokerage, Custom Choice Loan and SunTrust SummitView are federally registered service marks of SunTrust Banks, Inc. All other trademarks are the property of their respective owners.

Services provided by the following affiliates of SunTrust Banks, Inc.: Banking products and services are provided by SunTrust Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank, SunTrust Delaware Trust Company and SunTrust Banks Trust Company (Cayman) Limited. Securities, brokerage accounts and insurance (including annuities) are offered by SunTrust Investment Services, Inc., a SEC registered broker-dealer, member FINRA, SIPC, and a licensed insurance agency. Investment advisory services are offered by SunTrust Advisory Services, Inc., a SEC registered adviser. GFO Advisory Services, LLC is a SEC registered investment adviser that provides investment advisory services to a group of private investment funds and other non-investment advisory services to affiliates. Mortgage products and services are provided by SunTrust Mortgage, Inc.

SunTrust Mortgage, Inc. - NMLS #2915, 901 Semmes Avenue, Richmond, VA 23224, 1-800-634-7928. CA: licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, IL: Illinois Residential Mortgage Licensee #MB-989, Department of Financial and Professional Regulation, 100 W. Randolph, Suite 900, Chicago, IL 60601, 1-888-473-4858, MA: Mortgage Lender license #-ML-2915, NJ: Mortgage Banker License - New Jersey Department of Banking and Insurance, NY: Licensed Mortgage Banker—NYS Department of Financial Services, and RI: Rhode Island Licensed Lender.

"SunTrust Advisors" may be officers and/or associated persons of the following affiliates of SunTrust Banks, Inc.: SunTrust Bank, our commercial bank, which provides banking, trust and asset management services; SunTrust Investment Services, Inc., a registered broker-dealer, which is a member of FINRA and SIPC, and a licensed insurance agency, and which provides securities, annuities and life insurance products; SunTrust Advisory Services, Inc., a SEC registered investment adviser which provides Investment Advisory services.

SunTrust Private Wealth Management, International Wealth Management, Business Owner Specialty Group, Sports and Entertainment Group, and Legal and Medical Specialty Groups and GenSpring are marketing names used by SunTrust Bank, SunTrust Banks Trust Company (Cayman) Limited, SunTrust Delaware Trust Company, SunTrust Investment Services, Inc., and SunTrust Advisory Services, Inc.

SunTrust Bank and its affiliates do not accept fiduciary responsibility for all banking and investment account types offered. Please consult with your SunTrust representative to determine whether SunTrust and its affiliates have agreed to accept fiduciary responsibility for your account(s) and if you have completed the documentation necessary to establish a fiduciary relationship with SunTrust Bank or an affiliate. Additional information regarding account types and important disclosures may be found at www.suntrust.com/investmentinfo.

SunTrust Robinson Humphrey is the trade name for the corporate and investment banking services of SunTrust Banks, Inc. and its subsidiaries, including SunTrust Robinson Humphrey, Inc., member FINRA and SIPC.