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An article appeared recently on the editorial page of the Wall Street Journal

written by Warren Kozak, whose wife died earlier this year. Kozak indicated that his bankers had never recommended to him and his wife that they should name beneficiaries on their savings accounts.

Kozak was under the false impression that the savings account in his wife’s name would automatically transfer to him. He had to hire an attorney, at the cost of $465 per hour, to name him as the executor of the estate in order to give him the power to transfer the accounts.

The filing costs in New York City were $1,286, and the running attorney bill now stands at over $7,400, and is expected to increase.

Kozak also indicated that his wife had never named a beneficiary for the retirement account held at her bank. As I have pointed out many times, in order to make sure that your IRAs and other retirement accounts are inherited by the individual(s) you select, ensure that you specify a named beneficiary for your retirement accounts, and that the names are retained by the financial institution that maintains your account.

Name for each account

You need to name beneficiaries properly for all of your financial assets. As Kozak found out, it is very expensive and time consuming if you fail to ensure that you name a beneficiary properly for each financial asset you own.

For example, several years ago, I was named as the executor of my aunt’s estate. All of her assets were in the form of certificates of deposit held at various financial institutions.

For most of her accounts, she had named beneficiaries for the CDs she owned. Unfortunately, unknown to me, she neglected to name specific beneficiaries for some of her CD accounts.

She had a valid will in which she did name specific individuals who would inherit any assets in which there was no named beneficiary. The CDs she owned, in which she had not named a beneficiary, would be inherited by these individuals. However, in order for this to happen, I was forced to hire an attorney to file for probate.

Accordingly, the estate had to pay several thousand dollars in attorney fees to file for probate. The probate process took several months before the assets associated with the CDs that did not have a named beneficiary could be transferred to the individuals named as beneficiaries in the will.

Plan to avoid probate

Naturally, you would like your assets to be inherited by the individuals you select, and you want these assets to be transferred in a timely manner without expensive attorney costs and filing costs.

I suggest you make a list of all your assets, specify who you want to inherit each asset, and indicate what actions you have taken to ensure that these individuals will inherit that asset. Review this information with your attorney and/or financial planner.

If you have postponed preparing or updating a will to reflect significant changes in your life, don’t procrastinate. Set up an appointment with your attorney to make sure your will is up-to-date regarding your wishes.

If you want to educate yourself regarding ways to avoid probate, I recommend the book, 8 Ways to Avoid Probate

(www.nolo.com) by Mary Randolph. The author discusses the ways you can name beneficiaries for different asset classes such as stocks, bonds, retirement accounts and savings accounts so that you can avoid probate and its associated costs and delays.

Elliot Raphaelson welcomes your questions and comments at raphelliot@gmail.com.

© 2018 Elliot Raphaelson. Distributed by Tribune Content Agency, LLC.