A recent California Case highlights the importance of making sure you review your estate plan and beneficiary designations every couple of years. The beneficiary listed on retirement plans and Life Insurance policies supersede anything your write in your Will or Trust.
This was reinforced in a recent case where an Ex-Spouse received the life insurance proceeds of her former spouse after his death because he never took her name off of the policy, even though he wrote in his Will that he didn’t want anything to pass to her.
Be sure to check your beneficiary designations to ensure they are up-to-date with your current intent.
Here are the facts to the case mentioned above:
Estate of Post
Decedent Jerome Norman Post purchased a life insurance policy during his lifetime and named his then-spouse, Angela Post, as the primary beneficiary, and his sons from a prior marriage, Kenneth Post and Eric Post, as the contingent beneficiaries. Decedent was divorced at the time of his death, but he had not changed the beneficiary designation on his life insurance policy to remove his former spouse as the primary beneficiary. He had executed a codicil to his will shortly before his death expressing his strong desire that his former spouse receive nothing from him after his death, including by beneficiary designation. Decedent’s sons sought an Order designating them as the rightful beneficiaries of the decedent’s life insurance policy under Probate Code Sections 5040 and 9611. The appeals court found in favor of the former spouse and she was entitled to receive the life insurance proceeds.
In most cases, it is perfectly fine to have an out-of-state family member or other individual act as the personal representative (executor/administrator).
If you have questions regarding your status as a personal representative residing outside California, I encourage you to contact me. We are experienced in working with a personal representative who lives out-of-state and can make the process extremely efficient for you. Call us now for a no charge consultation: (858) 485-1990.
A revocable living trust can only control the assets that have been transferred into it. This process of changing titles and beneficiary designations to your trust is called “funding your trust.” It is a simple concept, yet it is what keeps you and your family out of Probate in the event of your death; it also allows you to keep more control over the distribution of your assets to your beneficiaries.
While you may intend to put everything into your trust, you may inadvertently leave something out of it. For example, you could acquire new assets after creating the trust and simply not get around to titling the assets in the name of your trust. Your pour over will states that if a “forgotten” asset is discovered after you die, the asset is to go into your trust. It may have to go through Probate first, but at least your pour over will catches the asset and sends it back (pours it over) into your living trust so it can be distributed as part of your overall estate plan.
Remember, a pour over will is simply a safety net. It is not a substitute for changing titles and beneficiary designations while you are alive. If your intention is to avoid probate (which is probably a big reason why you set up a living trust in the first place), you must fund your trust.
If you are unsure whether your Trust is properly funded, please contact us today.
Our website has the handout we gave out at our most recent presentation to our clients and friends regarding a Trustee’s job in administering a Trust after a death.
Here is the link to the handout: Your Job as Trustee
What it Means to “Fund” a Revocable Trust
After an individual (the “grantor” also known as the “settlor” or “trustor”) creates a revocable family trust, the next step is to implement the trust by “funding” it. “Funding” the revocable trust simply means transferring ownership of assets owned by the grantor as an individual to the trustee of the revocable trust.
Why a Revocable Trust Should Be Funded
In most instances, a grantor should transfer all assets in his or her own name to the trust to take advantage of the benefits of a revocable trust. Important benefits of a revocable trust include:
- Ease of management of assets during disability.
- Probate of Avoidance.
- Flexibility in disposing of non-probate assets.
Many clients believe that if they simply set up a revocable trust, all of the above benefits will follow automatically. Clients often forget, however, that only what is held in the name of the revocable trust avoids probate and ancillary probate at death and formal conservatorship in the event of disability. In addition, naming a revocable trust as the beneficiary of certain non-probate assets (such as life insurance proceeds, annuities, and death benefits) will ensure that these assets pass at death in accordance with the terms of a revocable trust.
Typically, the full benefit of a revocable trust will be realized only if most of the assets have been transferred into a revocable trust during the grantor’s lifetime.
Married couples face many challenges in retirement. One that is unavoidable and that consistently derails retirement plans is the loss of a spouse. Studies show that the death of a spouse often leads to an economic decline for the surviving spoues. This may stem from a loss of income, an inability to cope with the loss, or the inability of the surviving spouse to competently manage their finances. A few steps couples can take to mitigate this risk include: 1) having an open discussion about money matters, 2) cover what-if scenarios, 3) delay social security as long as is feasible, 4) check and recheck beneficiary designations, 5) gather a financial team, 6) make sure the estate plan is current, and 7) possibly relocate to a smaller home that requires less maintenance and has lowers associated costs.
See Robert Powell, How to Prepare Financially for Being a Widow/Widower, USA Today, January 19, 2018.
Dear Clients, Friends and Colleagues:
We are pleased to invite you and your guests to our 2018 Annual Estate Planning Seminar. If your clients, advisors, successor trustees or children would like to attend, please let us know.
The seminar will be at no charge. We will provide you with seminar materials and refreshments. We will make sure there is plenty of time for questions.
Email your reservation to email@example.com or give our office a call to let us know which seminar you prefer to attend and the number of guests.
We look forward to seeing you.
Roberta J. Robinson & Daniel J. Wilson