Have It Your Way!

Bren Sheriff
Bren Sheriff


Have It Your Way!

Let me speak plainly for a moment. Some of the biggest financial mistakes are not the ones you see coming. They are the quiet ones—the ones you believe have already been taken care of. Paperwork sitting in a desk drawer, file cabinet, or safety deposit box, untouched for years, waiting to override everything you thought you had in place.

One of the most expensive mistakes I see, time and time again, involves something many people barely think about: beneficiary designations.

Most folks believe that once they “get their house in order,” their job is done. They assume that when they make their transition, everything will be distributed according to their will or trust. It sounds reasonable. It feels complete.

But it is not always true.

Here is the part that catches people off guard: beneficiary designations on accounts such as life insurance policies, retirement accounts, and even some bank accounts typically take precedence over what is written in your will or trust.

Let that sink in.

Yes, you can have a well-written will or trust that clearly states your wishes, but if your beneficiary forms say something different, those forms usually win.

And that is where the trouble begins.

I have seen situations where an ex-spouse—still listed as a beneficiary from years ago—receives the proceeds of an employer-issued life insurance policy. Meanwhile, the current spouse and children—the intended heirs—receive nothing. Not because anyone meant for that to happen, but because no one went back to update the paperwork.

That is not a legal loophole. That is what happens when plans are not reviewed and updated on a regular basis.

Financial institutions are required to follow the contract on file. They are not in a position to interpret your intentions. They follow instructions. If those instructions are outdated, the outcome will be outdated as well.

This is not just a problem for large estates or wealthy families. In fact, those families often review their plans regularly. Unfortunately, this mistake hits hardest in households where every dollar matters.

Think about what many retirees and working families actually have: a home, a savings account, maybe a 401(k) or IRA, and a life insurance policy. That combination alone is enough to create a meaningful estate—and enough to create confusion if things are not aligned.

Now consider the financial impact. When assets go to the wrong person, families are left trying to sort it out after the fact. Legal challenges can be expensive, time-consuming, and emotionally draining. In many cases, the money is simply gone, with no practical way to recover it.

All of this from a form that may have been filled out ten, twenty, even thirty years ago.

This is why I often say: estate planning is not “once and done.” It requires coordination and periodic review to ensure your wishes are still accurately reflected.

Your will, your trust, your accounts, your titles, and your beneficiary designations all need to tell the same story. If they do not, the strongest document may not be the one you think.

So, what can you do about it?

Start simple. Schedule periodic reviews of your documents.

Make a list of your accounts—bank accounts, retirement plans, and life insurance policies. Then check the beneficiary listed on each one. Not what you think it says—what it actually says.

Ask yourself:

  • Is this person still the right choice?
  • Does this reflect my current wishes?
  • Have I had any major life changes—marriage, divorce, births, or deaths—since I completed these forms?

If the answer raises even a small question, it is worth updating.

There is another issue that often goes unnoticed. Some single parents name their minor children as beneficiaries, not realizing that minors generally cannot directly receive these assets. Without proper planning, a court may have to appoint someone to manage those funds—and in some cases, that could be the other parent. Think about how unintended and difficult that outcome could be.

Next, make sure someone you trust knows where your information is kept. Not necessarily the details, but where to find them. Silence and secrecy can create just as many problems as missing paperwork.

And finally, when you sit down with your advisor, be clear about your intentions. Do not assume the documents speak for themselves, make sure they reflect what you truly want - have it your way.

At the end of the day, this is not just about having a plan. It is about having an up-to-date plan that accurately reflects your wishes.

You worked hard for what you have. There should be no question whether your wishes will be followed—or whether an old form you forgot to change will make a decision that could break the hearts of those you intended to protect.

Best to you and yours,

Bren Sheriff, CSA

THIS WEEK’S QUIZ: When distributing assets, why do beneficiary designations often override what is written in a will?

Answer to last week’s quiz: The greater your assets, the higher your liability limits on your auto policy should be.  On the other hand, owners of older cars can lower coverage for repairs and replacement.

For Questions or Help: 773-817-0601 or basheriff1@gmail.com

Disclaimer: The illustrations presented in this column are not, nor are they intended to be, legal, financial, or any other licensed professional advice, you should contact the licensed professional of your choice for advice on your individual situation.

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