PODCASTEpisode 14 – The Critical Importance of Beneficiary Designations in Estate Planning
Do you have a 401k or IRA? How about life insurance? These are the type of assets that pass at your death in a very specific way, and careful attention must be paid to the beneficiary designations you have listed on these particular assets.
In this episode of Into the Woods, attorney Hannah Cannon returns to join host Dave Shaffer to zero in on the critical importance of beneficiary designations and how they could undermine your estate plan if not updated properly. They break down the crucial difference between probate and non-probate assets, explaining how assets with beneficiary designations pass automatically outside of your will. Hannah and Dave explore the mechanics of updating beneficiary forms, the importance of naming both primary and contingent beneficiaries, and why you should never name "my estate" as a beneficiary on retirement accounts due to adverse tax consequences. They also discuss how to coordinate beneficiary designations with trust planning, ensuring that assets flow properly to supplemental needs trusts or trusts for minor children. The episode features a compelling real-life case study from a 2013 US Supreme Court decision involving Warren Hillman, whose failure to update his federal life insurance beneficiary designation resulted in his ex-wife receiving $125,000 instead of his current wife—a costly mistake that could have been easily avoided with proper planning.