E312 Why Beneficiary Designations Are Bad

<p>It’s understandable that beneficiary designations <em>seem</em> like an excellent and easy estate planning tool. But from our experience, when someone actually dies, beneficiary designations are often bad news.</p> <p>We’ll describe a few reasons why beneficiary designations cause problems in probate when estate plans become reality. Then you can decide for yourself if beneficiary designations are worth the risk.</p> <h2>Outdated beneficiary designations don’t reflect your wishes</h2> <p><img class="aligncenter size-medium wp-image-43687" src= "https://anthonyspark.com/wp-content/uploads/2023/04/Outdated-beneficiary-designations-dont-reflect-your-wishes-300x169.jpg" alt="Outdated beneficiary designations, don’t reflect your wishes" width="300" height="169" /></p> <p>Often, by the time a person dies, their beneficiary designations are way outdated and no longer reflect the wishes of the decedent. How do we know that the designations are outdated? The beneficiary designations clearly conflict with the will, trust, letter of last instructions, and last conversations.</p> <p>Why? It is too easy to forget to update your beneficiary designations. It’s easy to download a beneficiary form from the bank website, sign, and return it. But, it’s very easy to forget to submit a change of beneficiary form when you make changes to your estate plan. For privacy reasons, the bank doesn’t list your beneficiaries when you get your statements. You have to remember to check if you’re not reminded on a regular basis.</p> <p>During <a href= "https://anthonyspark.com/e249-annual-professional-executor-checklist/"> our annual reviews</a>, we try our best to nudge our solo agers to keep their beneficiaries up to date (or remove them). My preference is to remove the beneficiary designations and let everything flow through the will.</p> <h2>What happens if there is not enough money in an estate?</h2> <p><img class="aligncenter size-medium wp-image-43688" src= "https://anthonyspark.com/wp-content/uploads/2023/04/What-happens-if-there-is-no