Monday, August 26, 2019

Beneficiary Forms Gone Horribly Wrong

Beneficiary Forms Gone Horribly Wrong.
By Melinda Gustafson Gervasi

Within the legal community there is a decent amount of discussion about whether or not our professional lives will be usurped by on-line and digital platforms.  Days like today reassure me that my professional life has a few good years, decades even, before a software engineer codes me out of business.

Take life insurance and children for instance.  New client call comes in.  Brief biographical information is provided related to: marital status, children, and financial instruments.  In short, caller is single with a minor child and his best friend from college is named as beneficiary of the life insurance because friend is a responsible adult who will do the right thing.  An actual attorney will likely hear this and say, "wait, tell me that again please" as her eyebrows rise higher on her forehead.  In contrast, your standard online will-writer will prompt "check here if you have named a beneficiary on your life insurance.". 

In my humble opinion, when you name a beneficiary who is not the person benefiting from the money you are making a big mistake.  Big.  Huge!  Why?  That money goes to that person, no strings attached.  And sure, most of the time that person is trusted and will do the "right thing".  However, if they give too much money to person the money was really meant for, they make get slapped with the federal gift tax.  Moreover, what if trusted friend goes through a divorce, dies, or gets sued?  That life insurance money, meant for someone else, will be caught up in the friend's mess.

This is the perfect example of why a lawyer still provides greater benefit than an online system.   When something does sound right, we'll raise our ears up and dig into the details making sure a huge mistake has not or will not occur. We can work around that pit of a mess and provide far more uniquely crafted documents.

Thanks for reading, and always, remember a blog is meant to spark discussion and should not be taken as legal advice.  Moreover, we have 50 different states, each with its own set of estate planning and probate laws.  Always seek the advice of a licensed attorney in your home state, not a blog.

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