Adult Beneficiaries

Your retirement account provides asset protection during your lifetime, but as soon as you pass that account to a loved one, that protection evaporates. When your spouse, child, or other loved one inherits your retirement account, creditors have the power to seize it and use the funds to satisfy their claims. This means one lawsuit and POOF!—your life-long, hard-earned savings could be gone. Your loved one could be left penniless. Fortunately, there is a solution to this problem.
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How your accounts are owned makes a big difference in estate planning. The main objective is usually to ensure that no accounts and property are in only your name when you die. Otherwise, they will be subject to probate, a costly, public, and time-consuming court process that many people prefer to avoid. Therefore, it is important that you review your accounts and beneficiary designations to be sure that the death of your loved one has not compromised your previously established plan.

Accounts with beneficiary designations, such as life insurance policies, retirement accounts, and annuities, will be distributed at your death, without probate court involvement, to the beneficiaries you have named.
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With our society becoming increasingly mobile and international travel becoming more affordable than ever before, families and family-like relationships have steadily grown far more diverse in terms of citizenship. It is no longer uncommon for spouses from different countries to retain citizenship in their native countries. Many couples split their time between the United States and another country to be near their families and enjoy the many benefits of such a lifestyle. In addition, it is not uncommon for a couple’s children or other loved ones to move away from their country of origin and take up permanent residence abroad, or even renounce their home country citizenship, depending on their choices of careers or domestic partners or other considerations.

Diversity of citizenship among friends and family also creates a fair share of complications.
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When planning for death, most people assume they will die before their beneficiaries (e.g., their spouse, children, and grandchildren). While these assumptions are often well-founded, they do not always come to pass. Sometimes a beneficiary of an estate or trust dies before the person leaving the inheritance.

You just found out that your favorite aunt, Aunt Melba, has died. In the midst of your grief and sadness, you receive a notice from the attorney handling Aunt Melba's affairs stating that you are a beneficiary. Your best friend advises you to get an attorney. What should you do? Will Aunt Melba's attorney help you? After all, Aunt Melba's attorney has been helping your family for years. Since this attorney knows Melba and the family affairs, shouldn't her attorney be able to help you as well?

That answer depends on the circumstances.
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Ask a group of friends if they have experienced a family fight over property after a loved one has died, and you will be in for a lively and eye-opening conversation. Far too many families end up fighting, or at least experiencing tension, over a family inheritance. But it does not have to be that way. Many families have worked through the details of divvying up a deceased loved one’s property remarkably well and ended up even closer. Having counseled families for years, we offer the following pearls of wisdom to help your family avoid fighting over your property when you are gone:

1. Be open and communicate with family members and loved ones.
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