Over the years, we’ve identified a number of common blind spots that clients often overlook—sometimes for decades. In this article, we’ll walk through what these blind spots are, why they matter, and the practical steps you can take to address them.
Why This Matters
Two closely related but often misunderstood areas are how your accounts are titled and who you’ve designated as beneficiaries. Getting these right is essential for making sure your assets pass efficiently and according to your wishes.
While every client has unique goals, the universal desire is to create financial security and peace of mind for loved ones. While proper account titling and beneficiary designations won’t guarantee that, neglecting them can lead to frozen accounts, legal delays, and unintentional outcomes—especially for surviving spouses or children.
Understanding Account Ownership
Account titles establish legal ownership.
- Retirement accounts (IRAs, Roth IRAs, 401(k)s, 403(b)s) must be individually owned. You can name beneficiaries, but they cannot be jointly held.
- Non-retirement accounts (brokerage, bank, real estate, vehicles) can be titled individually, jointly, or under entities such as trusts or LLCs.
Common Blind Spots
- Individually Owned Assets in a Marriage: It’s common to find that married couples hold non-retirement accounts solely in one name, without a joint owner or trust structure. If the individual passes away, these accounts are often frozen, potentially leaving the surviving spouse without access for months.
- Untitled Trust Accounts: Clients may set up a living trust but fail to retitle their assets accordingly. While attorneys often include “pour-over” provisions, those assets still go through probate and can take months to resolve—undermining the intent of the trust.
Beneficiary Designations
Beneficiaries direct who inherits your assets. They often override wills and bypass probate, which is why getting them right is crucial.
- Joint accounts pass directly to the surviving owner.
- Trust-owned assets follow the instructions of the trust.
- Individually owned assets without a beneficiary typically go through probate—a public, time-consuming, and costly legal process.
Common Blind Spots
- Outdated or Missing Beneficiaries: It’s not uncommon for accounts to have no beneficiaries listed or to still name an ex-spouse, deceased parent, or minor child.
- Not Reviewing Regularly: Life changes quickly. We frequently discover updates needed due to a death, birth, divorce, or new charitable intent.
How to Set or Update Beneficiaries
- Retirement Accounts: Designate primary and contingent beneficiaries. A common structure is spouse as primary and children as contingent. Some estate attorneys may recommend naming a trust.
- Brokerage Accounts: Add a Transfer on Death (TOD) designation.
- Bank Accounts: Use a Payable on Death (POD) designation.
- Life Insurance: Be mindful of ownership vs. beneficiary structure, as it can impact taxation.
Where to Start
As part of both our onboarding and ongoing planning process, we review all of a client’s accounts—whether we manage them or not—to ensure:
- Account titles align with your estate planning goals
- Beneficiary designations are accurate and current
If you choose to keep an account individually owned, we strongly recommend adding a beneficiary to avoid probate delays.
Other Considerations
- Charitable Giving: Retirement assets left to charities can reduce tax burdens on heirs.
- Spousal vs. Non-Spousal Beneficiaries: There are important tax and distribution differences.
- Updating Your Trust: A review of beneficiaries may reveal a need to revise your trust documents.
Final Thoughts
Your financial life is unique—and so is your estate plan. Ensuring your accounts are correctly titled and beneficiaries are properly designated is a foundational step in preserving your legacy and protecting your loved ones.
We encourage every client to not only create a plan but establish a process for reviewing it regularly. Your future—and your family’s—may depend on it.