As published in Sunday, July 4, 2010 Edition of the Lowell Sun

Many times people set up a will or trust and assume they will be all set once they pass away. But what they often forget is that things are always changing in their lives and what may have worked before doesn't necessarily work now. They may also own assets that may work independently, regardless of what the will or trust says.

You may not think the typical person's estate is all that complex, but any time there is money changing hands, especially among family and friends, things get tricky. If you're like most people, you've probably spent a good portion of your life building up your assets to live in retirement, or to pass along to your heirs. So make sure you take the time to prepare a plan for how these assets will be distributed.

There are many different ways to help facilitate this distribution of your assets; the most common is to create a will or a trust. It's best to consult with a professional who specializes in this area to find out what will work best for your situation. There is, however, one much easier task you can do on your own: Conduct a beneficiary review.

A beneficiary review is the process of looking at who you have named as beneficiaries on your retirement accounts, investment accounts, insurance accounts, employer-sponsored accounts and trusts.

These accounts are considered non-probate assets, which mean they will avoid going through the timely and costly process of probate. They also give you the ability to name beneficiaries so that upon your passing they are distributed to whom you have assigned, regardless of what a will or trust may say. When doing a beneficiary review, make sure it is coordinated with your total estate plan.

On the aforementioned accounts, you have the ability to name primary and contingent beneficiaries. A primary beneficiary is the person or entity that would receive the certain asset upon your passing. The contingent beneficiary stands second in line to inherit the assets. If the primary beneficiary were to pass away before the account owner, the contingent would then step up and be entitled to the asset in question. For example, a married person with two children typically puts the spouse as 100 percent primary beneficiary, and each of their children as 50 percent contingent beneficiaries.

You should review your beneficiaries every few years to make sure they are still appropriate for you situation. Also, any life-changing events such as a wedding, divorce, remarriage, birth or death should spark you to complete a review.

The avoidance of probate is often a big issue when creating your estate plan. Probate is the process by which an executor or court-appointed administrator manages and distributes a decedent's property. As you may imagine, this process can take some time as it works its way through the court system. For nonprobate assets, normally a death certificate and associated paperwork are all that would be needed to move the funds. This results in your beneficiaries receiving assets faster and avoiding many probate-associated expenses.

Another benefit of avoiding probate is that the general public can't make a claim on the assets. With a normal will, a party may challenge any part of the probate process such as challenging the will itself, the parties involved or the rights of certain parties. This can severely slow the process, and result in many added fees.

You have worked hard for the majority of your life to accumulate your assets; don't let a lack of simple planning result in taxes and expenses to reduce your estate.

James O'Hearn is a financial adviser for Enterprise Investment Services and an investment adviser representative of Commonwealth Financial Network, Member FINRA, a registered investment adviser. He is also a certified financial planner. For further information, James can be reached at 978-656-5639.

To speak with one of our trusted advisors about your needs, call 978-459-9000 or contact us today.