Fear of Estate Planning, as in doing a Will or Trust (or both) is a common malady. Everyone knows they should do something, but few people know exactly what that something is they should be doing. Fear of the unknown often keeps people from doing what they know they should do.

That “something” we should begin doing starts with learning what we don’t know so that we know what we should be doing. There is no enemy to fear here but fear itself (to paraphrase a former president). Once you begin to chart a course into the unknown territory of estate planning, the fear subsides, and a new day awakens!

Well, it might not be quite that exciting, but the fear will go away as you begin to see the picture clearly and understand what the issues are to be addressed.

It is true that there are lots of nuances and moving parts when it comes to estate planning. Doing a Will is only a component of estate planning, and it may not accomplish your goals or satisfactorily address your concerns by itself. In fact, it rarely does.

One area of estate planning that may not be on your immediate horizon, which is an integral component of charting a good estate planning course, is property for which you can make beneficiary designations. If you take the next few minutes to read through the rest of this blog, I will cover quickly the various considerations that should be addressed regarding beneficiary designations.

To being with, the kinds of property that allow for beneficiary designations includes life insurance, IRA, 401(k)s, 403(b)’s and such other assets. Anytime you purchase a life insurance policy, open an IRA or 401(k), the initial documentation includes a form to designate a primary beneficiary and (usually) secondary beneficiaries. Though you may not realize it at the time, these designations are part of your estate planning.

In my experience, people often don’t give a lot of thought to those initial beneficiary designations. Most people who are married will designate spouse as beneficiary. For qualified plans, the beneficiary must be a spouse, unless the spouse consents to the designation of a different beneficiary. When we fill in the beneficiary form, however, we aren’t thinking that this is part of our estate planning, but it is!

When you die, your beneficiaries who survive you will receive the assets for which they are designated. This distribution happens regardless of any Will or Trust you might have created. It happens automatically. The distribution goes directly to the beneficiary, and the Will or Trust has nothing to say about it.

When you did your Will or Trust (assuming you have one) did you think about that? You should have.

Does it make sense for that particular asset for which you have designated a beneficiary to go directly to that beneficiary? Or should that asset have been distributed somewhere else? Like into your Trust?

These are things that you should think through. These are things that your attorney should talk to you about (assuming that you used an attorney to do your estate planning).

They key often isn’t in the primary beneficiary, but in the secondary and even the tertiary (third) beneficiaries. If you think through the ramifications of only having a primary beneficiary, it doesn’t take long to realize that problems might occur.

How often do your travel together with your spouse? What happens if you both die in a traffic accident? These things do happen. If you don’t have a secondary beneficiary, then what? Your “estate plan” fails. Your estate plan will no longer be what you wanted.

Most people who are married and have children want their estates to go to their children if their spouses do not survive. But there may be issues with that.

Are your children adults? If not, then your children could not even receive and take control over any assets that are left directly to them. Children do not have legal capacity to receive assets directly.

If your children are adults, are you comfortable with your children receiving all of the proceeds of your life insurance or IRA or 401K directly, with no supervision? The answer to that question may depend upon many variables, including the age of your children, their maturity and sophistication, whether they are married (and how solid their marriage s are).

If there are reasons not to let assets go directly to your children, or whoever the beneficiaries are or secondary beneficiaries are, you’ve got some work to do. You need a different plan.

These are only the beginning questions to ask about beneficiary designations when doing your estate planning.

Estate planning does include a Will, but it might also include a Trust (depending upon your goals and concerns). It certainly should include consideration of the beneficiary designations on your assets that have beneficiary designations. Those beneficiary designations should work together with your comprehensive plan that includes a Will and/or a Trust to make sure that you have accomplished all your goals and addressed all of the concerns about the handling of your estate when you are gone.

There are many other estate planning “tools” that might be considered, depending upon your facts and circumstances and the goals and concerns that you have. Those other tools might include payable on death designations, transfer on death instruments, property powers of attorney, healthcare powers of attorney, living wills, bills of sale, deeds and other things.

Estate planning is kind of like a Lincoln Log set or Lego Set that needs to be pieced together to create what you want to accomplish. What pieces you use, and how those pieces fit together, should create a design that works uniquely for you. If the pieces don’t fit together, or don’t fit together in a way that makes sense for you, they may not work exactly as you would like them to work.

There is nothing quite so painful or frustrating as stepping on a Lego that is out of place and loose on your floor. If you haven’t done your estate planning, haven’t updated your estate planning in the last five years or so, you should consider contacting an attorney or certified estate planner to work through all of the moving parts to create an estate plan that will work the way you want it to work for the benefit of your loved ones. It will give you peace of mind and make sure that nobody gets hurt when some piece of your estate planning is out of place.