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Understanding the Ownership of Your Assets and Your Beneficiary Designations

Understanding the Ownership of Your Assets and Your Beneficiary Designations by Frank L. Buquicchio

It is important to understand the ownership of assets such as bank accounts, investments, retirement accounts, CDs and life insurance policies.

When a new client meets with an estate planning attorney, the first few questions the attorney will ask are:

  • What type of accounts are owned?
  • Are they owned individually or jointly?
  • Is there a beneficiary?

The answer to those questions will affect whether or not family members will have to go through probate, and it may impact that individual’s eligibility for Medicaid.

Jointly owned accounts are not protected.

Concern develops when an elderly person is faced with some kind of disabling illness and it appears that they will need extensive or long-term care. If their health deteriorates to the point where they need to be placed in a nursing home, it becomes very costly.

People generally want to protect their assets (especially if they are a widow or widower), so they may add one or more of their children to their bank account(s). They do this because many believe that if it is a joint account at least half of the money will be protected. However, in most cases, those funds are not protected. Jointly owned assets, or assets left to a beneficiary, avoid probate, but are not necessarily protected from Medicaid.  

Update beneficiaries whenever a life-changing event occurs.

Consider the following: an elderly client recently passed away. His two daughters contacted our office for advice regarding his estate. When their mother died several years earlier, the women believed that their names were added as beneficiaries to their father’s life insurance policy and bank accounts. However, when their father died, they discovered that the only beneficiary listed was their mother. As a result, they will now have to go through probate to get their inheritance, whereas if he had named them as beneficiaries, they likely would not have needed a lawyer–they could have just collected their money on their own.

Additionally, if a spouse or a child becomes ill and they are named as a beneficiary on a life insurance policy or a retirement account, that money could be unprotected. This is why it is important to plan carefully in terms of your beneficiary designation, and take a fresh look at accounts and policies every four or five years. Whenever life-changing events have occurred, it may be time to change the beneficiary.

Why do people let this happen?

It could be the reality of facing their own mortality. When people are in a crisis situation or concerned about a crisis, they do not want to talk about it. People do not want to talk about ending up in a nursing home, or their mother or father ending up in a nursing home… or dying. Sometimes the biggest challenge is getting people to come in and talk about it.

When was the last time you checked your beneficiary designations?

Vincent J. Russo & Associates, P.C.
1600 Stewart Avenue, Suite 300
Westbury, NY 11590
800-680-1717

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