The Estate Plan You Already Have
Warren Hillman was a federal employee who owned a Federal Employees Group Life Insurance (FEGLI) Policy with a death benefit worth over $124,000. Hillman had named his former wife, Judy Maretta, as the beneficiary on that policy. When they divorced, Hillman neglected to change that designation, even after he remarried. When Hillman died in 2008, his ex-wife, Maretta, collected on the policy. Hillman’s widow then sued to recover the benefits. Mrs. Hillman fought a five-year court battle that concluded when the United States Supreme Court ruled that Hillman’s ex-wife was entitled to keep the entire amount.
You don’t need a will for everything you own
Whether you have made a will or not, there are certain assets that will not pass to your heirs through a will ― these are assets where the benefits are paid to a named beneficiary, and include:
- Life insurance policies
- 401(k)s, IRAs and Keoghs
- Bank accounts structured as pay-on-death to or “in trust for” specific beneficiaries
Moreover, a will is not necessary to transfer ownership to a surviving joint tenant of real property (a house or land), personal effects, or joint bank accounts.
You do, however need a plan of action
A large portion of the billions of dollars that are held in retirement plans — including $824 billion dollars of FEGLI coverage — is in danger of being paid out to unintended beneficiaries. Here’s how to prevent that from happening to your-hard earned assets:
- Keep your beneficiary designations current. After many years, you may not remember who you named as your primary and contingent beneficiaries ― remember to update your beneficiary designations after a major life event such as marriage, divorce, a child’s birth (or death,) or the death of a spouse.
- Name a contingent beneficiary who will collect if your primary beneficiary predeceases you ― this will prevent the plan from paying the funds to your estate and, therefore, subject to probate.
Even when an asset is of the kind that does not pass by will, an experienced estate administration attorney can help you make sure that you have made the best provisions possible. Contact our office today.