The answer is usually a resounding no. On the estate planning side of the practice, clients come to us with a jumble of transfer options that are not coordinated. They are getting contradictory advice from insurance agents, financial planners, banks, and investment companies. They have done what these persons have suggested and they think they are in good shape. They are usually not in good shape. They are defeating their goals not obtaining them. It is a rare client that we consult that has correctly coordinated their estate planning documents, whether it is a will or a living trust, with their beneficiary designations. On the probate side of our practice, we are continually confronted with heirs who, for very good reason, believe that beneficiary designations are incorrect, wrongfully made, or made at a time when the owner of the account lacked capacity. Whereas by law, a will must be executed with particular formalities, be witnessed, and should be notarized. There is no such requirement for beneficiary designations. They can be done online. How do we know the person using the login of the account owner is really the account owner? We don’t know that. Fraud, thus, proliferates.
How about bank accounts or investment accounts with right of survivorship. Often, there is no explicit statement by the account owner that they intended the account to transfer entirely to a particular beneficiary despite the boilerplate fine print language in the bank or investment company documents. Why would someone who has left their estate equally to four persons, consistently throughout their life leave their largest bank accounts to one person near the end of their life? Usually, it is done wholly unintentionally.
In short, as financial institutions have pushed hard for beneficiary designations, and the Texas legislature has bent to their will to facilitate them, we are seeing a greater degree of hodge-podge, lack of coordination, outright fraud, and unintended consequences. Effective estate planning can fix this. It requires thought, careful action, and consistent follow through.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
