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Many types of property and investments pass outside of probate and allow you to designate who will receive them after your death. It is important that these designations are kept up to date and are consistent with the rest of your estate plan. When you open up an investment account or retirement plan or buy life insurance, the company encourages you to name beneficiaries who will inherit the property on your death. The choice you made at the time may not have taken your estate plan into consideration. To review your beneficiaries, get a copy of all of your beneficiary designation forms. Check to make sure that your beneficiaries are consistent with the rest of your estate plan or, if they are different, that the difference is intentional. If you made these designations online, print a copy of the page so that you also have a paper record. Once you have collected all of these forms, put them in a folder with your other estate-planning documents so that you and your heirs can quickly and easily find them in the future. In determining how to make your beneficiary designations, the following are the considerations for each type of account: Bank and investment accounts. If you have a revocable trust as part of your estate plan, you can make the trust the owner of all of your bank and investment accounts. This way you avoid the need to name anyone as beneficiary and you still avoid probate. Then, all of the protections provided in the trust--for instance, that children do not receive their inheritance until a certain age or provisions for who receives the funds if a beneficiary predeceases you--will apply to the accounts. If you’re not using a revocable trust, simply name those who will receive your estate under the terms of your will. Or you have the option to name no one. If you do not designate a beneficiary, the account will pass according to the terms of your will and, while you won’t avoid probate, you’ll make sure that the people you want will receive the assets, that your personal representative will be in charge, and that any changes you make in the future--such as disinheriting your wayward nephew-- will apply to the accounts. Life insurance. Unlike bank and investment accounts, the ownership of many life insurance policies--especially those that come as an employment benefit--cannot be transferred to your revocable trust. And there is really no benefit to doing so in any case (although there might be some tax and long-term care planning reasons to transfer property to irrevocable trusts). Instead, the beneficiary designation is the most important decision. If you have a revocable trust, you may name it as the beneficiary for the reasons mentioned above. Or you can name particular individuals. The beneficiary designation form will permit you to name alternates in the event that the first person or people you name predecease you. Retirement plans. First, don’t transfer your retirement plans to your revocable trust. The only way to do so is to liquidate the plan first, which would be a taxable event. Second, don’t name your revocable trust as a beneficiary of your retirement funds without consulting your lawyer. In most instances, if your spouse is not the beneficiary, the retirement plan will have to be liquidated and the taxes paid within 10 years of your death. On the other hand, if you have a relatively small amount of funds in retirement accounts, this might not be a big problem. It is much more important with retirement plans than with life insurance or other investments that you designate a beneficiary, because there are different rules for different beneficiaries. If your spouse inherits your IRA, your spouse can treat the IRA as his or her own. Your spouse can either put the IRA in his or her name or roll it over into a new IRA. The rules for a child or grandchild (or other non-spouse) who inherits an IRA are somewhat different than those for a spouse. The beneficiary must withdraw all of the assets in the inherited account within 10 years. There are no required distributions during those 10 years, but it must all be distributed by the 10th year. To make sure that your beneficiary designations align with your estate plan and are as beneficial to your intended heirs as possible, talk with an attorney here at Elville and Associates.  Initial estate planning consultations as well as document reviews are free, and we look forward to being a resource to your family and you.  To make an appointment, contact Legal Administrator Mary Guay Kramer at mary@elvilleassociates.com, or at 443-741-3635.

By Stephen R. Elville, J.D., LL.M. -- Principal and Lead Attorney of Elville and Associates, P.C. Beneficiary designations can make or break an estate plan. Without proper and accurate beneficiary designations, retirement plan assets can flow in unintended ways causing many potential problems including, but not limited to, the following: loss of lifetime stretch out of required minimum distributions for new class of eligible designated beneficiaries under the SECURE Act; for married persons, inefficient use of the new 10-year rule under the SECURE Act due to the “spousal rollover trap”; loss of designated beneficiary status or eligible designated beneficiary status; triggering of the five-year default rule whereby all plan assets must be withdrawn and taxed within five (5) years - this means that for all practical purposes the entire IRA or qualified plan is taxed immediately; failure of the plan assets to reach and fund important spendthrift trusts for spouses, children, grandchildren, nieces and nephews; failure of your retirement plan assets to reach intended charitable beneficiaries tax-free; and more. Risking failure of your estate plan and/or the acceleration of income tax on your retirement plan assets is just not worth it. Check your retirement plan beneficiary designations today, in consultation with your financial advisor, estate planning attorney, and CPA. Hopefully you will find no surprises. And if you do, you’ll be glad you performed a check up. Are you taking the time to think about this issue? Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com. #elvilleeducation

Effective estate planning must contemplate not only your own desires or preferences as to whom or what will receive your estate after death, but also what impact that inheritance might have on the beneficiary.  The most common example of why and when this is important is when an intended beneficiary has special needs and is receiving public benefits, in which case a supplemental needs trust may be necessary to protect both the beneficiary and the inheritance.  Other less obvious circumstances faced by beneficiaries who receive your inheritance deserve contemplation too, though. A beneficiary who is receiving public benefits for a reason other than disability, for example, and who will therefore face the difficult choice between receiving an inheritance and losing the public benefits, or refusing the inheritance in order to stay on public benefits. For most people, this decision is one between a rock and a hard place, utterly defeating the best intentions of the decedent and the decedent’s estate plan. With careful consideration and planning, this unfortunate result can be avoided. Another set of circumstances that is likely to lead to more trouble than a decedent intends to cause for his or her beneficiaries is one in which property is left to two or more beneficiaries who don’t get along.  This reality can lead to infighting, which, in the worst case scenario, can lead to litigation and the dissipation of assets, thereby wasting the distribution the decedent intended for the benefit of the recipients. It may be hopeful, but not realistic, to believe that beneficiaries who don’t get along while you are alive will be able to communicate and work together after you die – particularly where money is involved.  Again, careful planning can ensure that your intentions achieve a positive result and aren’t wasted by the realities of whom you choose to leave your estate to.  The point in all of this is that you may have the very best intentions – but in your efforts to ensure those intentions see long-term success, it is vital to take into account the realities of your beneficiaries and all intended circumstances. For more information, please call 443-393-7696 or complete the form below.