Beneficiary Lessons Learned

Early in my career I learned a personal lesson that set me on a path to become a much more aware financial advisor today and throughout my career. This was particularly true in the area of estate planning and even more particular, beneficiary planning. I learned that people can spend a lifetime building wealth for themselves and their families to then have much, if not all of it, lost at the back end of their lives.

My grandfather was a company man in the home office of a large drug store company for most of his working days. He lived a long life into his late 80s and was married to his third wife, Francie, who was the only maternal grandmother I had known as they were together since before I was born. Grandpa passed away in 1989 and Francie passed away unexpectedly less than a year later as she was still in her 70s and in relatively good health. It was only then that my mother and her siblings went to their condo to sort through personal affects and prepare the condo for sale. What they found was a relatively tidy home but no real organization of their financial documents. In fact, they found shoe boxes with cash, bank statements and even stock certificates. After sorting through them, it turned out Grandpa and Francie had a lot more than anyone expected and most of their wealth was the stock titled in his name.

Fast forward a year or so and much time spent in probate court, my uncle, who was the executor for the estate, informed my mom and other family members that a long lost niece of Francie in California was in line to inherit everything. “How could that happen?” everyone thought. Simple answer was, when Grandpa died, everything by law (in IL) passed to Francie and then subsequently to her next blood relative when she died, her niece in CA, who had not seen her in decades let alone attended either funeral. The niece hit the no estate/beneficiary planning lottery!

I have no doubt that Grandpa and Francie never meant for their worldly belongings to be passed the way they were. A few simple steps and forms would have changed most everything and had a much better end result. They just did not know any better and no family discussions had been had about what they wanted to happen to their savings and property when they were gone.

There would have been several strategies that could have avoided the outcome for my family and should be considered for all families:

1) Proper titling/ownership and/or Transfer on Death designations for all financial assets. (Nocost/Free)

2) Beneficiary designations for any life insurance and retirement accounts like 401ks and IRAs had they existed (which they did not) but much more common today. (No cost/Free)

3) Trusts and/or wills for laying out intentions for non-financial assets (personal items as well as real estate). Trusts also for financial assets but would have to be sure to name the trust as a beneficiary or actually title the assets in the trust. (We have access to qualified attorneys and tax advisors to
help)

Ideally, this should have been done before Grandpa passed but could have been salvaged if done before Francie passed. It's never too late, unless it's too late!

Fast forward 30 plus years and I can now say that while it was stressful and disappointing for my mother and her siblings, I have done everything in my power since then to spread the word about the importance of planning and not to let anyone I care about let this happen to their families. There is a reason why our team is so focused on being sure all of our clients have an estate/beneficiary plan and to make sure to review and update it as often as necessary but at least annually. We also stress the importance of actually naming primary and contingent beneficiaries for all retirement and non-trust owned assets. We even work to ensure this is done for assets not currently under our care (Employer Plans especially). We also encourage our clients (husbands, wives, siblings, children, parents, grandparents, etc.) to have as open a dialogue with their families as possible so that nothing gets left unsaid, or as important, unsigned.

As always, thank you for being our clients. It is a privilege to serve you.


Matthew J. Frederick, CRPC®
Senior Financial Advisor



Wells Fargo Advisors is not a legal or tax advisor. This information is made available with the understanding that Wells Fargo Advisors and its affiliates are not engaged in rendering legal, accounting or tax advice. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.