Should I Name My Executor As The Beneficiary of My Financial Accounts?

I received an email from a client over the weekend that alarmed me. So much so that called them on a Sunday afternoon to make sure remedial action was immediately taken.

When I transmit my clients’ legal documents, I always remind them that Wills do not control the disposition of assets such as retirement plans and insurance policies that have a beneficiary designation and financial accounts that have a pay-on-death beneficiary or are held as joint tenants with right of survivorship. Rather, those assets pass to the joint tenant or to those identified on the beneficiary designation forms. As such, it is important to coordinate the beneficiary designations on such assets with your Will.

So, if your Will makes an outright distribution to your spouse as the primary beneficiary and your children as the contingent beneficiaries, your beneficiary designation forms should do the same. This is really important because beneficiary designation on these types of assets trumps the Will. In other words, if you have identified your spouse as primary beneficiary in your Will, and your children as contingent beneficiary, but you list your executor as the beneficiary of your life insurance policy, then your executor inherits the proceeds of that policy when you die.

However, the client misunderstood and thought that it was necessary to name the executor as beneficiary in order to give him the power to distribute assets as specified in the Will. Thankfully, the client contacted me to verify, and we were able to rectify the mistake immediately.

Tragedy averted. Whew!

The importance of coordinating your non probate assets such as retirement plans, insurance policies, and financial accounts cannot be overemphasized. If you have any questions at all, please contact your estate planning attorney to verify that your beneficiary designations are properly made.

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