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It is very important that you update and review the beneficiaries on all your documents. It would be best if your estate could avoid probate. Probate is the process by which the courts decide what happens to your property after you die. It can be a costly, sometimes time-consuming burden on the survivors. Of course, you can draft a will in order to make your wishes and intentions clear to the probate court, but in the end, the court could interpret your will in a way you did not intend. Fortunately, some of the most valuable assets in your estate will convey directly to your beneficiaries without ever seeing the inside of a probate court. Whoever is listed on the beneficiary designation forms for your IRA, 401(k) plan, annuity contract, and life insurance policy will inherit the proceeds — and all the probate courts in the world cannot order a different result. I suggest that you review these beneficiaries on an annual basis. A good time is when you begin the process of gathering documents to prepare your taxes. When you designate a life insurance beneficiary, the death benefit will go to the named person or persons, regardless of whether your will, trust, or last words say otherwise.
Life-changing events such as birth, marriage, divorce, and death can affect decisions about whom you name to inherit the money. Some common mistakes might include:
Failing to name a new beneficiary if the original beneficiary has died.
Buying a policy when a first child was born but failing to name children born subsequently.
Failing to name a new spouse after a divorce or the death of the previous spouse.
If you, the IRA owner, do not address three important issues, someone else will. And it is more than likely someone else's choice will not be as good for you - and a poor choice could mean the end of your IRA.
Do not think that you have named an IRA beneficiary simply because you have executed a will. IRAs should not pass through your will. They should pass to the person named as your IRA beneficiary on a separate IRA beneficiary designation form. If you neglect to name an IRA beneficiary or your beneficiaries cannot locate your IRA beneficiary form, then your IRA will most likely pass to your estate.
If your IRA does pass to your estate, then it will be distributed according to your will if you have a will. That means that your IRA which should be a non-probate asset, will now become subject to probate and the related legal complications. Leaving an IRA to your estate also means that it will become subject to any creditors of your estate. Another problem with letting your IRA pass through your estate is that most of whatever is left after erosion from probate and creditors will be lost to taxes.
There is probably no other aspect of estate conservation that is as simple or inexpensive as naming a beneficiary. Yet experts contend that it’s common for beneficiary designations to be outdated. If you can’t name your beneficiaries from memory, then it’s possible that your life insurance and retirement assets may not go to the people you intended. Name your IRA beneficiary now and keep an acknowledged copy - signed and dated by someone of authority (anyone with a title) at your IRA financial institution - of your IRA beneficiary designation form.
Also name a secondary (or contingent) beneficiary in case your primary beneficiary predeceases you or to create an estate planning path. Let your heirs know where the form is. If they cannot find it and your financial institution has changed, merged or has simply lost the form, then you have no designated beneficiary. Estate issues are difficult enough without creating additional problems for survivors by incorrectly naming beneficiaries. It’s wise to review your beneficiary designations on a regular basis to ensure there are no surprises later.
Jo Anne E. Grella, Vice President of GRELLA Financial Services, securities
offered through LPL Financial Member FINRA/SIPC. Please send any questions or comments to joanne@grellafinancial.com
The minute we bring our first child home from the hospital, wrapped snugly in that universal striped blanket, we start thinking about and planning for our child’s future: Pre-school or stay at home? T-ball or soccer? Dance class or musical instrument? Public or private school? But it’s easy, in the everyday jumble of parenting, to let one critical aspect of planning for the future fall by the wayside: estate planning. A 2007 study by Harris Interactive found that more than half (55 percent) of adult Americans do not have a will. The study also uncovered some reasons why people do not have wills or estate plans: they don’t like to confront their own mortality; they don’t know who to talk to about creating a plan; they perceive themselves as having a lack of sufficient assets.
Why a will? A will allows you to say in writing who will get your assets when you die. It also allows you to arrange for guardianship of minors. If you and your spouse die at the same time without a will, the state decides how to distribute your assets, and the state has the authority to appoint the guardian of your minor children. The court will appoint someone to be your child’s guardian but it may not be the person you would have chosen. Basically, whoever asks to be appointed first will likely be appointed guardian, and it would take a huge amount of time and expense on the part of other would-be guardians to undo that appointment. The will, then, is an important step. But many people stop there, when what they really need is a full estate plan.
What then, is an Estate Plan? A full estate plan consists of incapacity planning documents as well as documents which allow for the orderly and efficient disposition of your estate. The incapacity planning documents consist of a health-care proxy, a HIPAA authorization and release and a power of attorney. The health-care proxy allows a named agent to make medical decisions on your behalf in the event of your incapacity; the HIPAA authorization and release will permit you to obtain your loved one’s medical records and speak to his or her health care provider; and, finally, the durable power of attorney authorizes the person you name to handle your legal and financial affairs in the event of incapacity. Without these pieces in place, an illness or accident could pit family members against each other trying to determine your wishes or handle your affairs (witness the notorious Terri Schiavo case). A full estate plan usually includes a trust, which allows you to specify exactly how and when your assets will be distributed upon your death. The primary advantage of a trust, unlike a will, is that it allows your assets to pass according to the terms of the trust without needing to go to probate court. Trust assets are immediately available to pay creditors, funeral expenses and costs of last illness. With a trust, you can stagger distributions to your children over several years. Without a trust or a will, assets held by the guardian are payable to the children once they turn 18, which can be a less-than-ideal situation for a lot of reasons. Perhaps the most important component of trusts is that they allow your estate to avoid probate.
What’s probate? Probate is a court which has the responsibility of determining the validity of a will and of appointing the executor of your estate. The simple reason that probate courts exist in this context is that if you own assets in your own name and you pass away, there is no one to sign over the title of your asset (your home, car, boat, bank account, etc.) The executor cannot act on behalf of the person who passed away until he or she is appointed by the court. This can take many weeks. The executor or administrator must post a bond, then file an inventory of all of the assets of the estate. In the case of real estate, and this is particularly true if a person dies without a will, the administrator of the estate must obtain a license to sell the real estate from the court. It’s a time-consuming and expensive process that can eat away at the assets of an estate and can also delay the distribution of assets—the estate’s executor can’t pay creditors, list the property for sale or even pay for the funeral until the will has been allowed and the executor has been appointed. All of this can be avoided with a trust.
I see the importance of all of this, but I’m still confused. Where do I start, and how much will this cost me?
Many attorneys bill at an hourly rate for work on wills and estate plans, but that rate can vary widely based on the attorney’s location. In the suburbs, you might find an attorney billing $200-350 per hour. In downtown Boston, that figure could be as much as $700 per hour or higher. The important thing is not so much the cost, it’s whether you can work with the attorney. You need to feel comfortable with the attorney you’ve chosen—you need to feel that you can ask questions and explain any concerns you might have about the process. These, after all, are questions of life and death.
For any estate planning needs, contact:
Attorney Raymond J. Cannon, Jr., 575 Turnpike Street, Suite 12 No. Andover, MA 01845 P 978-989-9999, F 978-989-0089
There is a high suicide rate among people 55 and older and because of this there is a group called the Samaritans of Merrimack Valley. The objective of this group is to train individuals that frequently come in contact with older adults in how to assess and intervene with an older person at high risk.
Suicide in general is the 11th leading cause of death in this country. In 2005 alone over 32,000 people took their own lives. As tragic as this certainly is, I found it quite astounding that suicide is 5 times more likely in individuals over the age of 60. The rate of suicide is even higher in white males 85 years and older. Since suicide has always been an ongoing part of our culture, the goal is to reduce the incidents particularly in the age bracket which was the focus of this presentation. What issues would set the stage for an older person to plan and carry out an act that would end their own lives? That is a rather complex question to answer as cited in this training program but there are many determining recognizable factors that could place someone at risk to consider such an act. Advancing age coupled with a variety of significant health, social, environmental and financial hardships can play a major role. Mental health issues such as depression and psychosis may also be included. Much older people in many cases experience extreme loneliness possibly due to the death of a spouse or friends, social isolation because of mobility disadvantages, fear and even a sense that they no longer matter anymore. Most of us know older adults whether they are family or friends that may have evolved into some of these characterizations or conditions. Without realizing it, we are assessing their ability to cope with their challengers and want to know how we can help. It would never occur to us that that person could be considered a risk for suicide. I am not suggesting that all aging individuals will consider such an act, but statistically speaking, this grouping is by far more susceptible. It is worth highlighting, however, that many experts believe most successful suicides in general are accomplished by those suffering from depression, alcoholism, and schizophrenia.
A major tool in determining risk, is consciously doing a suicide assessment. After taking a look a some of the more obvious factors that I cited, it is important to note what type of support services are involved, any history of attempts, signs and symptoms of depression, and how they solve problems that greatly impact their lives. It is just as important to know that if that person has confidence in their physician in both their physical and emotional well being. Since mental health issues
often represent an important element in determining risk factors medication therapy is likely to be recommended making it part of the intervention process. Older adult suicide is certainly a topic that needs to show itself for what it really is - a terrible tragedy. In my opinion, younger adults and teenagers seem get the most press when it comes to suicide prevention and treatment. When it comes to a needless and horrific ending of one’s life, both should be seen equally as a very deeply disturbing occurrence. Anybody that has a personal and professional relationship with older adults and has developed a keen awareness of recognizing the potential for harm will most certainly have a positive effect in lowering this very sad suicide rate. As a society, we owe it to ourselves to spread the “word” as I have learned from this seminar. The good Samaritans of Merrimac Valley are to be commended for their efforts and their active presence in our community.
If you have any questions regarding suicide,
prevention, contact:
John Macauda
Staff Support Coordinator
Providing Geriatric Home Health Care and Senior Services in the Merrimack Valley, North Shore, and Southern New
Geriatric Assistance Inc. Hampshire
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Serving generation to generation since 1926. 
