By: Trevor L. Stapleton

We recently had a call from an individual, “Person X”, who was asked to pay money to a Companion to help settle the estate of the Companion’s father. Specifically, the money was necessary to pay estate taxes, to allow the release of the decedent’s assets. The Companion provided Person X a copy of a “Will” that seemed to look like a formal and “official” document. It had our firm’s name, logo, and address at the top, recited some “testamentary” sounding language, included the name of an attorney alleged to work at our firm, and had an official-looking “seal” near the signature line. The Companion indicated that several thousand dollars were needed to pay estate taxes, to allow for the release of the several million dollars in assets listed in the “Will.”  Thankfully, Person X was suspicious and, rather than just relying on an internet search to verify that our firm exists, Person X called us and sent us a copy of the “Will” to look at. There were numerous problems with the Companion’s story, and we could immediately see many issues with the document itself. In addition, to claim these assets, there would need to be a probate proceeding. Moreover, all the decedent’s money and property would be available and required to be used to pay any estate taxes, assuming any estate taxes would even be due, which is not necessarily the case due to current exemption amounts. So, a proper analysis required drawing together a number of elements that are not evident to someone without the requisite knowledge or experience in estate planning. Thankfully, Person X was suspicious and contacted us, and we were able to confirm that the story and the document were fake, and this was, unfortunately, a scam to take Person X’s money.

It was clear that the Companion had taken the time to piece together a document to support the tale and ask for money, and by including an actual law firm name, logo, and address, lend it credibility. Research on the internet would verify that yes, we are a law firm in Sacramento, and our services include estate planning, so it could be plausible that the document was authentic. But the internet cannot take the place of the knowledge, experience, and analysis of an estate planning professional.

So, please be careful, trust your instincts, and if something seems off, do not just rely on what you find online. Contact experienced professionals to assist you. A little time or cost now can save you and your family from heartbreak and disaster down the road.

By: Trevor L. Stapleton

Many kinds of accounts and property allow for a beneficiary designation, sometimes called
transfer-on-death (TOD) or payable-on-death (POD) designations, that allow the account to pass
directly to a beneficiary on your death. Do you know if you have made any beneficiary
designations on your accounts? Have you reviewed these lately to be sure they are still consistent
with your wishes? Did you know that TOD, or POD designations, take precedence over your
Will or living trust? Are you aware of what can go wrong if there are issues with your
beneficiary designations?

If you answered “no” to any of these questions, it may be time to review your accounts,
particularly your TOD and POD beneficiary designations, to be sure everything is complete,
accurate, and up to date. An annual review is crucial to ensuring that your accounts and property
go quickly and seamlessly to the right people.

Where to Find TOD, POD, and Beneficiary Designations
Beneficiary, TOD, and POD designations in writing that specify who will receive the asset (e.g.,
accounts, property, death benefits, etc.) after the original owner dies. These designations allow
you to pass assets directly to your beneficiaries and avoid probate. This results in faster
distribution to your family and loved ones and can reduce costs relative to settling your estate.
Some common assets with beneficiary designations include the following:
● retirement accounts—401(k)s, individual retirement accounts, and other
retirement plans;
● investment accounts—Brokerage accounts, stocks, bonds, and mutual funds;
● bank accounts—Checking accounts, savings accounts, and certificates of deposit;
● life insurance policies— Including whole, term, and group; and
● real estate—TOD deeds or survivorship designations on title.
For most, their homes and financial accounts are the primary source of wealth, making it all the
more important that beneficiary designations for these assets reflect your current wishes.

What Can Go Wrong with an Omitted, Incomplete, Inaccurate, or Outdated Beneficiary
Designation?
According to financial advisors, beneficiary form errors are among the most common—and the
costliest—estate planning mistakes that people make. These errors fall into a few main buckets:
● Failure to name a beneficiary. Many people simply forget to complete beneficiary
designation forms or put them off indefinitely. This situation is especially common for
inherited accounts.
● Outdated information. Major life events such as marriage, divorce, the birth of a
child, or the death of a beneficiary generally mean that beneficiary designations need to
be updated.
● Inaccurate or missing information. Mistakes in spelling, addresses, or other
identifying information, or failure to provide complete information, can cause delays,
confusion, or even disputes when processing beneficiary designations.
● Naming a minor as beneficiary. Technically, minors can be named as
beneficiaries, but they cannot legally receive or manage money and property above a
certain value. If they are named as beneficiaries, a court may need to appoint a guardian
to oversee the funds for them until they reach the age of majority (18 years of age in
some states and 21 in others).
● Overlooking complex circumstances. A beneficiary may be unable to manage
their inheritance because of a disability, special needs, poor money habits, mental health
issues, or substance use disorder.
● Not naming contingent beneficiaries. If the primary beneficiary dies before the
account holder or cannot be located, and no contingent (backup) beneficiary has been
named, it will be treated as if no beneficiary had been named.
● Lost or invalid forms. Unfortunately, financial institutions sometimes misplace
beneficiary designation forms or fail to process them correctly. Also, if a financial
institution or employer changes the plan’s service provider or administrator, the original
beneficiary designation may no longer apply, meaning that a new beneficiary
designation form needs to be completed under the new provider.

In addition to the unintended distribution of accounts, property, or death benefits and related
disputes, an invalid, missing, or outdated beneficiary designation can result in the assets
requiring probate administration, resulting in payout delays and increased costs:

Robert had a brokerage account but never designated a beneficiary. When he died, the
account became part of his probate estate, resulting in a lengthy and expensive legal
process that delayed the distribution of his money. Moreover, the costs of the probate
reduced the final amount that went to his heirs, and even though Robert may have told
family that he wanted the brokerage account to pass to a specific beneficiary, through the
probate proceeding, the account was divided among several beneficiaries.

Calendar Your Estate Plan Review
You should be reviewing your estate plan at least every few years or after any significant life
event. But even if you have not formalized your estate plan (what?!?!), you should, at a
minimum, review your account beneficiary designations and ask:
● Are these beneficiaries still the people you want to receive your accounts?
● Are the beneficiaries still living?
● Are they capable of managing the inheritance? Should they receive an outright
distribution, or are safeguards needed?
● Is there more than one beneficiary named, and if so, how hard is it to divide the
account or property, and what is the potential for conflict between/among the
beneficiaries?
● Do the beneficiaries know that they are named? Do they know how to proceed
after your passing?

As part of your review process, it is important that you have accurate information. Get the
current confirmation directly from the financial institutions of what they have on record. Do not
just rely on memory or copies of forms you originally filled out.

Even if everything looks good after a review, you may benefit from reviewing your plan with
your attorney or financial advisor. They have seen it all and may be able to suggest options or
alternatives that are better suited to your needs.