Many people understand that a Will is one way to control where you want your assets to go upon your death. However, what many people don’t understand is that a Will cannot control assets that have designated beneficiaries. Retirement accounts, such as 401(k) plans and individual retirement accounts, and life insurance policies are types of assets that frequently pass outside of the Will as they have designated primary and contingent beneficiaries. This means that the person named as a beneficiary on those accounts will generally receive the money no matter what the Will says. Bank accounts can also have beneficiaries listed by utilizing a form known as a pay-on-death or POD. It is important to note that if these types of accounts don’t have beneficiaries listed on them, or if the beneficiary has passed away prior to your death, these assets will go through probate and fall under the control of your Will.
It is also important to be aware that a Will cannot control your finances or health care decisions while you are alive, nor can it give someone the ability to make these decisions for you. A Power of Attorney is a lifetime document that allows you to designate an attorney-in-fact to handle your financial affairs in the event that you are simply unavailable to do so yourself or if you are incapacitated and unable to manage your finances. Similarly, a Health Care Directive is also a lifetime document, but rather than dealing with your financial affairs, it allows you to appoint agents to make health care decisions for you, in the event you are unable to do so. As these are lifetime documents, both terminate automatically upon your death.
Now, more than ever, it is important to make sure you have estate planning documents in place – and that your documents will function the way that you want them to. At Chandler and Brown, Ltd., our knowledgeable estate planning attorneys would be happy to meet and determine the best plan for your individual situation.