Trusts

Not Just Your Will Needs to be Updated: Beneficiary Designations

You can update your will twenty times, but if you don’t change the beneficiary designations, the unwanted consequences could be awful for your loved ones.

You can update your will twenty times, but if you don’t change the beneficiary designations, the unwanted consequences could be awful for your loved ones.

MP900442211It happens more than you’d think: a husband thinks he has made all the necessary provisions for his second wife. Then he dies, and during the process of settling his estate, the first wife becomes the recipient of an extremely generous life insurance policy. The ex-spouse is planning a long trip to Europe, while the current spouse can’t do a thing about it.

As WMUR explains in its recent article, “Money Matters: The trump card of estate planning,”depending on state law, beneficiary designations can be the trump card of estate planning. In almost all cases under this scenario, the ex-wife will receive the life insurance proceeds.

That’s why assigning and regularly reviewing your beneficiary designations is a critical part of estate planning. Remember that assets for which beneficiary designations trump wills or estate directives include the following:

  • Individual and Group Life Insurance;
  • Traditional and Roth IRAs
  • Qualified Retirement Plans and 401(k)s;
  • Employee Stock Ownership Plans (ESOPs);
  • Contractual rights under deferred compensation plans; and
  • Employment contracts

It’s vital to remember that a change to your will or your trust doesn’t automatically make changes to all your assets listed in those documents.

Beneficiary designations are effective immediately after death.  Since they override any instructions made in your will, those assets won’t have to go through probate. Be certain that your beneficiary designations are updated and coordinated with your overall estate plan. It’s a good idea to review and update them, after any major life event like a marriage, divorce, or the birth or adoption of a child.

Don’t forget to name contingent beneficiaries as well. If the primary beneficiary passes way, or if you die at the same time, that way you can be sure that the proceeds from the accounts go to the secondary or contingent beneficiaries. This is especially important, if your beneficiaries are over age 50.

Reference: WMUR (April 5, 2018)“Money Matters: The trump card of estate planning”

Tom Benson Excludes Daughter and Grandchildren from his Will

The last will of multi-millionaire Tom Benson, who owned several professional sports teams and other businesses, did not include his daughter and her children

Before he died, the owner of the New Orleans Saints and Pelicans gave millions of dollars of property to his daughter and her children, but they were not included in his last will and testament.

Tom-BensonThe last will of multi-millionaire Tom Benson, who owned several professional sports teams and other businesses, did not include his daughter and her children, according to an article from KPVI,“Though excluded from his will, Tom Benson's daughter and grandchildren received much from family patriarch.”

Following Benson's death, court records indicate that his third wife Gayle became the sole beneficiary of an estate controlling New Orleans' NFL and NBA franchises, as well as the Dixie Brewing Co. There were other valuable businesses or properties in the estate: three car dealerships, the site of Benson Tower and Champions Square, a $3.6 million Uptown mansion, a racing stable and a parking lot used by fans attending Saints or Pelicans games.

As the will reads, daughter Renee Benson, granddaughter Rita LeBlanc, and grandson Ryan LeBlanc received nothing further. They were parties in a complex, two-year court battle that began in 2015 after a falling out with Benson. The three were left with control of three car dealerships, bank branches and a hunting ranch in and around San Antonio.

Louisiana law allows relatives up to five years to decide whether they want to challenge the validity of a will. The allegations are typically that the deceased was either mentally incapacitated or subject to undue influence in making the will.

 However, the estate planning attorney who helped Benson prepare his will, Paul Cordes Jr., said he’s confident the document would survive a challenge. Benson’s will was drafted only a few weeks after a New Orleans judge found Benson was mentally fit enough to handle his own affairs, which Renee and her children had denied in a lawsuit filed in 2015.

Although Gayle is the sole beneficiary of her late husband's estate, Saints and Pelicans President Dennis Lauscha is the administrator. All of Benson's property was placed in a trust, the governing terms of which haven't been made public.

When Gayle passes away—she’s now 71—it is likely that there will be trust rules that will direct the line of succession. Gayle has no children of her own. But we won’t know what those rules are unless very specific circumstances occur. Sounds like Benson did some good estate planning.

Reference: KPVI (March 19, 2018) “Though excluded from his will, Tom Benson's daughter and grandchildren received much from family patriarch”

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