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Do I need a will? Or can I just designate beneficiaries?

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  • Do I need a will? Or can I just designate beneficiaries?

    Hi, I am a single intern without any kids. I have $50k in life insurance through my residency program (free for me), I have ~$40k in a Roth IRA, and approximately $10k in the bank.

    My plan was to leave $50k to one of my older brothers since both he and his wife combined make about what I make on my intern salary (if not less). And I was planning on splitting the other $50k equally between my 3 nieces and nephews (all are under the age of 10). Neither my parents or my other siblings need the money since they all make as much as I'll be making as an attending.

    Questions:

    1. Do I need a will of some sorts, or would it be as simple as designating these people as my beneficiaries on my accounts?

    2. How would they go about finding out they are my beneficiaries if I were to die? Does the bank/brokerage firm contact them? How would said bank/brokerage firm know I died? Do I need to notify my brothers now that I'm placing one of them and my nieces and nephews as beneficiaries? Do I need to let them know which bank I bank with and which brokerage firm I use? Do they need my account numbers or just my general information?

    3. Would anyone pay any taxes on this money when I died? I'm assuming no for the Roth IRA. What about the money in my checking/saving account? What about the life insurance money (once again free for me, so I'm assuming my program is paying the premiums on my behalf)?

    4. What is the best way to designate these accounts to each individual? Would it be best to leave the Roth IRA and bank accounts to the my nieces and nephews and my life insurance money to my brother or vice versa?

    Edit: If it matters, I have no debt.

    Edit: Should I leave $10k for myself so it could pay for funeral expenses?
    Last edited by Romberg45; 06-12-2020, 07:21 AM.

  • #2
    If you have no true dependants, and no non liquid assets a will wont really help anything- just make everyone you want is a beneficiary on death. Most accounts will ask for persons name, relationship to you, SS number and address so they'll know who to contact. Trickier if you own a house or stuff that isnt "payable on death"- there a will can help.
    If you are really concerned about funeral expenses you can buy funeral insurance, or prepay your burial plot/urn/etc.
    More important though is I think you should have a living will--> do your siblings know your wishes if you are incapacitated in any way? DNR/DNI status? If you are vented for a long time? Feeding tubes, etc? Do they know what kind of funeral you want?

    Comment


    • #3
      Strictly assets: someone needs to notify the bank or institution to make a claim. Whether it is the beneficiary or a trusted relative, the account/policy details need to be known.

      The risk is likely you will have a change in your desires. Romberg45 will be perceived as “cutting the beneficiaries out”. Consider a sealed envelope with someone you can trust and won’t be offended by not being an heir to your fortune!

      I have transaction authority to a brother’s retirement account and my checking account set up. I know exactly who to give the cash to and that person knows how to distribute it. Takes a lot of trust. Feelings get bruised besides the legal issues.
      Probate is needed for anything that can’t be disposed of without a court order. Like a car or an account without a beneficiary.

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      • #4
        Do a will even if it's one of those cheapy twenty dollar online ones. Somebody is going to have to clean out your place. And what happens as you accumulate more assets?

        Tim, depending on how you set it up, your transaction authority might expire with your brother and his heirs on intestacy could come after you for their money that you stole from them.

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        • #5
          You need a will. If you want to make a specific bequest to split an account in various directions, a POD or TOD designation (for non-retirement accounts) is not designed to do that, to the best of my knowledge.

          Isn't it pretty likely that your family situation will change over your lifetime, though? Sounds rather cumbersome to go from account to account changing all of these designations as your life changes. Have you thought about purchasing a small term life policy and designating the amounts you want to go to your beneficiaries?
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6
            I know you are asking a different question, but here's something I did fairly recently that I thought was useful. I set up LastPass for all of my accounts, and designated an emergency access person who can request the passwords, and if I don't respond in a week, will gain access. This way, my spouse can not only access my accounts, but will be able to see all of them . I also put notes in there with final instructions, where my will is, what life insurance policies I have, etc. I have heard from several people that digital access can be tricky to handle in this situation.

            Comment


            • #7
              Originally posted by billy View Post
              If you have no true dependants, and no non liquid assets a will wont really help anything- just make everyone you want is a beneficiary on death. Most accounts will ask for persons name, relationship to you, SS number and address so they'll know who to contact. Trickier if you own a house or stuff that isnt "payable on death"- there a will can help.
              If you are really concerned about funeral expenses you can buy funeral insurance, or prepay your burial plot/urn/etc.
              More important though is I think you should have a living will--> do your siblings know your wishes if you are incapacitated in any way? DNR/DNI status? If you are vented for a long time? Feeding tubes, etc? Do they know what kind of funeral you want?
              Good call on the living will. Once I did my SICU rotation in a level 1 trauma center, I realized quickly I needed those. Unfortunately, I made one and never got around to getting it notarized. I should probably do that.

              Comment


              • #8
                Thanks for all the responses. To clarify things, I truly have no dependents. And no assets (other than furniture, clothing, and electronics). I rent an apartment, and my car is still in my parents' name. I never got around to changing that, but I'll probably be selling the car and living without a car in residency. I don't think I need a car because of where I live.

                I have no need for life insurance. I would see that as an absolute waste of money (no financial dependents). The only reason I have the $50k life insurance policy is because it's free and I am automatically enrolled in it at the hospital.

                I suppose I could leave my IRA to the nieces/nephews and my life insurance policy to my brother. Then maybe I could leave my checking/savings accounts to my dad to pay for my funeral. I'm just curious if they would have to incur any gift or estate taxes. My thoughts is no for the Roth IRA and bank accounts, but maybe yes on the life insurance since I don't pay the premiums.

                If I create a will, or even just write one down myself on a piece of paper, I would just give it to my siblings and father and tell them to keep it in their safes. I would write down the location of my money with account numbers. so they would know how to access it. Then I would also put in a clause saying that piece of paper (my will) is terminated upon my marriage or upon the birth of my first born child and all assets would then go my wife or children.

                I just wanted to make sure this wouldn't cause unnecessary taxes to anyone if I died.

                Comment


                • #9
                  Originally posted by mkintx View Post
                  I know you are asking a different question, but here's something I did fairly recently that I thought was useful. I set up LastPass for all of my accounts, and designated an emergency access person who can request the passwords, and if I don't respond in a week, will gain access. This way, my spouse can not only access my accounts, but will be able to see all of them . I also put notes in there with final instructions, where my will is, what life insurance policies I have, etc. I have heard from several people that digital access can be tricky to handle in this situation.
                  Hmmm... I've never heard of that before, but I don't think I'd be interested in a service like that. I don't think I could trust anyone with the power like that. What if I was out of the country for a week and didn't check my emails or phone? Or what if I was hospitalized and someone stole my accounts and all my money. I mean, I trust my family right now, but you never know who's going to get a drug addiction in the future and steal everything from you.

                  Comment


                  • #10
                    Originally posted by Romberg45 View Post

                    Hmmm... I've never heard of that before, but I don't think I'd be interested in a service like that. I don't think I could trust anyone with the power like that. What if I was out of the country for a week and didn't check my emails or phone? Or what if I was hospitalized and someone stole my accounts and all my money. I mean, I trust my family right now, but you never know who's going to get a drug addiction in the future and steal everything from you.
                    It's a really good question. We gave each other power of attorney when we made our wills, and also did health care power of attorney, etc. I guess we have a lot of trust in our marriage, lol. That said, I don't actually keep my bank account or investment passwords in this service. I do say where the accounts are held in my final instructions notes, so they can be searched for.

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                    • #11
                      Originally posted by mkintx View Post

                      It's a really good question. We gave each other power of attorney when we made our wills, and also did health care power of attorney, etc. I guess we have a lot of trust in our marriage, lol. That said, I don't actually keep my bank account or investment passwords in this service. I do say where the accounts are held in my final instructions notes, so they can be searched for.
                      I suspect he missed the part about it being your spouse. But why not just leave you password somewhere where he/she can find it instead? Or a death folder err legacy binder https://www.physicianonfire.com/lega...ian+On+FIRE%29 (been meaning to do something like this... but almost done with game of thrones..)

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                      • #12
                        Originally posted by Shant View Post
                        Do a will even if it's one of those cheapy twenty dollar online ones. Somebody is going to have to clean out your place. And what happens as you accumulate more assets?

                        Tim, depending on how you set it up, your transaction authority might expire with your brother and his heirs on intestacy could come after you for their money that you stole from them.
                        I am giving it to his daughters. The plan is move it if he is alive and gives me a written instruction to move it. The daughters are beneficiaries on accounts.That is to avoid something like hospice. Absolutely zero risk from his heirs. I could leave it. Then they can deal with it. You are correct, authority end with death.

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                        • #13
                          Originally posted by Romberg45 View Post
                          I have no need for life insurance. I would see that as an absolute waste of money (no financial dependents). The only reason I have the $50k life insurance policy is because it's free and I am automatically enrolled in it at the hospital.

                          I just wanted to make sure this wouldn't cause unnecessary taxes to anyone if I died.
                          How about splitting that policy among the nieces and nephews, solving 1 problem, and creating an account with $50k having a TOD designation for your older brother?
                          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

                          Comment


                          • #14
                            Originally posted by jfoxcpacfp View Post

                            How about splitting that policy among the nieces and nephews, solving 1 problem, and creating an account with $50k having a TOD designation for your older brother?
                            My thought process of giving the life insurance money to my brother was so he could use it to pay off his car debt and hopefully he'd put the rest towards his house. And the reasoning to give the Roth IRA to my nieces and nephews was so that stuff could grow tax-free for decades.

                            Both my brother and his wife have pensions at their jobs (luckily from two different states for diversification). I honestly don't think they would treat a retirement account appropriately. I think they would just cash it out and pay down their debt, thus the reasoning of wanting to give the Roth IRA to the nieces and nephews.

                            I spoke to my friend who is about to graduate law school and he recommended I get a will online for cheap. I'll probably just do that.

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                            • #15
                              Originally posted by childay View Post

                              But why not just leave you password somewhere where he/she can find it instead? Or a death folder err legacy binder https://www.physicianonfire.com/lega...ian+On+FIRE%29 (been meaning to do something like this... but almost done with game of thrones..)
                              I actually have a legacy binder, but found it was easier to do online. I change my passwords so frequently that it would be a lot of work to keep it up to date, as well. Doing it with lastpass has made me realize that I have over 200 passwords. Now they are all unique, random/strong, and changed frequently. I have 22 passwords for work alone, due to multiple hospital systems and various applications used at each.

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