Wills, Trusts, Beneficiaries, Oh My!

Most people avoid thinking about their death, and for good reason!  Death saddens us and it can be a very painful and stressful event in any family.  Whether you’ve just started a family, you work in the medical field, or you’ve recently lost a family member, you may have started to reflect on the importance of making your personal wishes known in the event of your own death.  Is there something you can do right now to put nagging thoughts to rest? You bet! Let’s take a look at wills, trusts, and beneficiaries.

Beneficiary Review

If you have insurance policies and retirement accounts, your first thought should be in naming or reviewing your beneficiaries. It costs nothing to file a beneficiary designation for your insurance policy or investment account. If you’re married, naming your spouse as primary beneficiary is usually a no-brainer. Single people often name a trusted member of their family.  But what about naming a contingent beneficiary? It’s a great idea to go one step further to name someone who would inherit the proceeds if you AND your primary beneficiary were to die, or in the event your primary beneficiary dies prior to the designations being updated.

A Word About Minors

If you have minor children, it’s important to know that they can’t inherit assets while underage. Naming someone who can be trusted to care for your children until they are 18 would be one option.  Just be aware that beneficiaries receive the money with no binding instructions; they get the funds whether they agree to save it for your child’s college tuition or decide to take a vacation. Don’t forget to go back and name the kids themselves when they turn 18!

Transfer on Death

Some accounts, such as non-qualified brokerage accounts or savings accounts, don’t allow you to designate a “beneficiary” per se. But you can still put a legally binding document on file that transfers the assets to a beneficiary at your death.  The “Transfer on Death” designation names beneficiaries who can receive the assets without going through probate. You can ask your bank for a TOD form for your checking and savings accounts, and your financial advisor can put one on file for any brokerage accounts or investments in your name. This is also free.


What happens when your estate becomes even more complex – with investments, insurance policies, property, and perhaps business ownership? It’s time for a trust, which is a legal document that can lock in your wishes for all of your assets. A trust can cost $1500-$2500, with the majority of this paid to the estate planning attorney for its preparation.  In addition to naming the grantors and trustees (the funders and controllers), you can name several layers of contingent trustees and outline your beneficiaries in great detail. You can specify the division of your assets down to the greatest detail. Revocable trusts can be changed and updated as your needs, assets, and desires change over time.

Is a trust the same as a will?  Not exactly, though they share some features. A will is a legally enforceable document that outlines how you want your affairs handled when you die. Guardianship for children, care of pets, division of your personal belongings, burial and funeral preferences, and to some extent, the division of your assets.   Though wills can be simpler and less expensive to prepare, the distribution of assets will still be handled in probate court. Wills must be signed and notarized to be legally binding.

It’s important to note that beneficiary designations trump the will when it comes to life insurance, annuities, or retirement accounts.  If you make updates to your will, it’s crucial to go back and make sure beneficiaries are updated too!

One benefit of a trust is that its execution avoids probate, so your heirs may access the funds more quickly and you can often save the 2-4% cost involved in probate fees. The trust will usually deal with specific assets and it will be important to re-title those assets you want to be included in the name of the trust. You can also name the trust as a contingent beneficiary instead of naming minor children, with specific instructions that help ensure the assets are used for their benefit.

What about a “living will”? Also known as an advance medical directive, this important document states your wishes surrounding medical intervention when you cannot communicate them, such as in cases of accident or terminal illness. You can make decisions about organ donation and life support, as well as name a person to manage your healthcare (Medical Power of Attorney). Naming a Durable Power of Attorney goes hand-in-hand with this, letting you specify who you wish to have handle your financial and legal affairs when you cannot.

While beneficiary and TOD designations are your first line of defense and are generally free, there will be a cost to establish and file the various legal documents discussed. These costs vary. Online services like Legal Zoom can simplify the documents’ creation and even bundle estate plan documents, walking you through the steps to establish your last will, living trust, living will, and power of attorney. Free organizers and templates can help you sort out what is most important to you as you get started.

Last but not least important, seek the advice of experienced professionals. Your financial advisors can help with the beneficiary and TOD designations, and an estate planning attorney can help create the estate plan and documents when you’re ready. With those decisions put in writing, you can resume the important work of living

For more information on these topics, check out this blog.

If you’re considering working with us here at Mosaic, we invite you to learn more about who we serve and how we help them. You can also contact us with any questions you have.

By Sheila Evans | Practice Coordinator of Mosaic Financial Associates & Orthopaedist Advisory Group | Non-Producing Registered Representative | Securities and advisory services offered through Cetera Advisors LLC, Member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor.  Cetera is under separate ownership from any other named entity.