A recent article from 24/7 Wall Street highlights the importance of checking on beneficiary designations on every single account and every asset. The article, “Three Years After Dad’s Death, Why Can’t I Access His 401(k)?” tells an all-too-common story of an heir who is unable to access his father’s assets despite all efforts. Rubbing salt in the wound: account updates continue to arrive at the son’s home.
The son has his father’s Social Security number, the 401(k) plan information, his birth certificate, and his father’s death certificate. He has sought answers from the large national investment company through phone calls and online. However, the company has refused to provide him with any information. His father neglected to fill out the beneficiary designation for the account, and this has made all the difference.
Without a beneficiary designation, the funds will likely be distributed directly to the estate. If there were a will, the asset may eventually pass to the son. Making matters worse in this case, there was no will. The only avenue now is for the estate to wind its way through probate under the supervision of the court.
Completing or updating a 401(k)-beneficiary designation form is a simple act, ensuring that the funds in the account bypass probate and go directly to the heir. Lacking this and a will, the son may want to find an estate planning attorney to navigate a challenging situation.
From the perspective of the investment firm, the absence of a will and no beneficiary designation means the funds will not be released, except under the direction of the court. As a fiduciary, it has a legal obligation to protect the interests of the original account owner, not the beneficiary.
This situation is a cautionary tale: if you don’t have an estate plan, you’re setting loved ones up for a stressful, frustrating, and in some cases, expensive, situation. Prior estate planning is essential if you want to pass assets to the next generation or gift them to a charity.
Start by reviewing all your accounts, including 401(k)s, IRAs, and bank accounts, to make sure the beneficiary designation is completed. Next, meet with an experienced estate planning attorney to create a will and other estate planning documents. You’ll want a Power of Attorney so someone else can manage your affairs in case of incapacity, as well as a Health Care Power of Attorney. Your estate planning attorney will determine what other documents you need to protect yourself while you are living and ensure that your wishes are followed after you have passed.
Think of estate planning as a legacy of love. Planning now protects you and your loved ones from years of red tape, trying to work through bureaucracies, and adding stress and frustration to their grief.
Legacy One Law Firm, APLC is an estate planning and probate administration law firm in Los Angeles, California, serving families throughout the State. Schedule a quick and easy consultation with our estate planning attorney, Sedric E. Collins, Esq., or call 323-900-5450.
