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Jul 11, 2017

Hope you’re aware of this

What do you think of when you see the words “estate planning”? You may picture a meeting with an attorney to put together a will and trust.

What you might not know is that even if you don’t have a will and trust, there is a good chance that you are actively engaged in estate planning.

Every time you open an account that requires you to name a beneficiary, you are engaged in your own estate planning. Think IRA, 401k, annuity, life insurance policy.

And there’s the title you put down on a piece of real estate you own. That’s estate planning too.

Did you know that your beneficiary designations on your accounts supercede your will and trust?

So if your account titles are set up incorrectly then you could be in for a whole lot of frustration and expense when “life happens” and your estate plan needs to kick in.

Take, for example, the story of the married couple who are both in a second marriage and the husband has a child from his previous marriage.

Let’s call them Jeff and Mary.

Jeff and Mary did put together a will and trust which stated that that upon Jeff’s passing, his assets should be divided 50/50 between his wife Mary and Jeff’s daughter from his previous marriage.

Unfortunately, Jeff had a big 401k account which listed Mary as the sole beneficiary. Ouch!

So instead of Jeff’s 401k going to his daughter and his wife in an efficient manner, Mary had to receive all the 401k assets and then get half over to Jeff’s daughter.

Mary did the right thing, but this mess created a substantially higher tax bill and a ton of emotional distress.

The thought I want to get across in this week’s blog is the importance of understanding what goes into an estate plan and don’t “set it & forget it.”

I hope you can check out our very brief explainer video on one very important component of your estate plan…

Your Advanced Medical Directives. Click the photo below to watch. Thanks and call any time with questions.


Paul Hitchcock
Director of Business Development
BarthCalderon, LLP
Website + About Me

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