We sold our manufacturing business last year and I've been slowly moving the proceeds into a mix of index funds, a couple of CDs, and a small brokerage account. It just hit me that I never updated the beneficiary designations on any of these new accounts. Most still have the default TOD language from the custodian. I have two adult kids from a previous marriage and my current wife, so getting this right matters. Anyone else dealt with this after a sale? How did you coordinate it with your overall estate plan?
Estate Planning
Updating beneficiary forms on all your new investment accounts
Did this exact thing two years ago. The accounts themselves aren't the hard part, it's making sure the Designations line up with your will and any trust you have. We had to retitle a couple of accounts into our revocable trust instead of just changing beneficiaries.
Call the custodian directly. Online forms sometimes quietly override each other, especially if you're married filing jointly on some accounts. I'd confirm in writing what they have on file before you assume it's done.
quick questin - are these accounts joint with your wife or individual? That changes the whole picture.
Good question. Two are individual, the brokerage is joint with right of survivorship, and the CDs are individual. I reaalize now that mix makes it messier than I thought.
That mix is exactly why I'd get an attorney involved. The joint account passes outside probate automatically, but the individual ones with TOD designations will control over what your will says. If you want a specific split between your kids and your wife, the beneficiary forms are the actual tool, not the will. We spent a few hundred dollars having ours reviewed and it was worth it.
I'll push back a little. An attorney is fine but don't overcomplicate it. If the goal is simply wife gets the joint stuff and kids split the individual, you can do that with the forms. Just be consistent. The disaster stories I've seen are people who update three of five accounts and forget the rest.
Agree with consistency. Make a simple spreadsheet listing every account, custodian, account number, current beneficiary, and what you want it to be. Keep it somewhere your wife can find it.
This. Also check whether your state requires spousal consent for beneficiary changes on certain accounts. Some states are stricter than others and people get surprised.
Was going to say the same about spousal consent. And if any of the accounts are retirement accounts, the rules are different again. You mentioned index funds so probably taxable, but worth confirming.
All taxable, no retirement accounts in the mix. The spreadsheet idea is a good one. The joint brokerage account was set up by the advisor who handled the sale and I honestly don't know what beneficiary language it has. I'll ask for the paperwork.
One thing nobody mentioned - if you have a trust, don't name the trust as beneficiary on every account without talking to the attorney first. It can work but it can also create problems depending on how it's drafted. We named our trust on some accounts and individuals on others and it took a while to get the reasoning straight.
That's a fair point. Our attrney actually recommended naming the trust as contingent beneficiary on the individual accounts so it only kicks in if something happens to both of us. Primary beneficiaries stayed as the kids. Took me a minute to understand the difference between primary and contingent designations.
One more: keep copies of the completed forms. Custodians lose things. I had a TOD form get overwritten when we moved an account to a different platform.
This thread has been more useful than the hour I spent on hold with the custodian yesterday. I'm going to call my attorney next week and bring the spreadsheet. Thanks all.