When is estate planning through beneficiary designations and/or payable on death designations a good idea? Merrell and Krystal discuss the very particular situations and criteria that makes this a safe estate planning tool.
Timestamps
:30 Merrell discusses her perfect client for this kind of estate plan – life insurance, homestead, checking account, and a retirement account, a modest estate and two adult children that are in good places in their life.
1:47 Krystal elaborates on additional things she looks for in trying to plan outside of a will, recommending estate planning through beneficiary designations: children that get along and have a good relationship if they will inherit assets together; no special needs issues, and more
3:08 The estate planning quadrant (take a trip inside Merrell’s head). “The Asset Action Plan” is divided into 1) own it with someone else, joint tenants, rights of survivorship, 2) assets that have beneficiary designations, 3) in their own name, not owned with anyone else and without a beneficiary designation (this kind of asset would go through probate), and 4) if a revocable living trust, the things that are titled in there.
4:08 How the Asset Action Plan works to avoid probate – moving all assets into box 1 or 2. Caution – this does not provide asset protection to the next generation.
4:36 What about business ownership transfers upon death?
5:30 If you’re going to do estate planning like this, you MUST have a good Durable Power of Attorney. A good one!
6:14 When other advisors tell you to use beneficiary designations and screw up a carefully crafted trust-based estate plan. (Advisors and estate planners, this is why we need to work together.)
7:22 For example, financial advisors, our mutual client may not be comfortable discussing her daughter’s bad marriage and why I have things set up so that she won’t inherit everything outright.
Resources
When is not making a last will and testament a bad idea? See Your Caring Law Firm’s article about jointly owned accounts and Quit Claim deeds.