Show #254 Airing: Sunday, May 2, 2004
Have you made a will or trust, or named beneficiaries on your assets, to distribute your estate at your death? I hope so, because otherwise you’ll have the state of Ohio doing the job for you.
But lots of folks who go to the trouble to make wills or trusts, or name beneficiaries on their assets, end up actually leaving these gifts to the wrong people or organizations. That’s right. Their estate is passed to different people or places than they intended.
Why? Why does this happen? The answer is alarmingly simple. They failed to correctly specify the right beneficiary. Let me give you three examples.
First, let’s say you want to leave money to your Uncle, Robert Williams. So you name Robert Williams in your will. When you die, your money doesn’t go to your Uncle. Instead, it goes to his son, your cousin. What went wrong? It turns out your Uncle’s legal name is Robert J. Williams, Jr., and he goes by Bobby. His son is Robert J. Williams the third, and he goes by Robert.
Your cousin is now the happy recipient. Sure hope you like him!
Second, you name your three children as beneficiaries on your CD’s, insurance and IRA’s. Unfortunately, one of your children dies before you. Even though your will says that your deceased child’s share should go to his children, that’s not what happens, because the designation of beneficiaries on your CD’s, insurance and IRA’s takes precedence. And since you failed to specify on those assets that a deceased child’s share should go to the deceased child’s children, your good intentions are wasted. Instead, your surviving two kids get everything, and your deceased child’s kids are totally cut out.
The third example involves organizations. It’s wonderful when people decide to leave something to their favorite charities. Perhaps the church that aided them spiritually, or their college alma mater. The problem is, the inheritance often ends up elsewhere.
Let’s say your wife died of complications from diabetes. You received so much support from the local diabetes organization that you’d like to say “thanks” by leaving them some money in your will. So you name the diabetes association as beneficiary.
There’s only one problem. There are at least three different diabetes groups that do business in Cleveland. There’s the Diabetes Association of Greater Cleveland, the American Diabetes Association, which has both a national and Cleveland presence, and the Juvenile Diabetes Foundation. All are completely independent. If you don’t specify the exact one, your money may go to a good cause, but not the specific one you had in mind.
Even if there’s only one organization, your money still could end up in the wrong place. Let’s say the Alzheimer’s Association has provided comfort and care for your family. Naming the Alzheimer’s Association in your will may not be enough. Without specifying that you want your money to go to the Cleveland Chapter, to support the work of their support groups, your money instead may be given to the national Alzheimer’s Association office in Chicago.
As you can see, by not being as specific as possible, the outcome of your final wishes could be quite different then you ever imagined! My message to you today is be specific, detailed, and exact when naming beneficiaries. Check your will, trust and designations on your various accounts. And do it now, before it’s too late!
