Did you know that you could be making a big
estate planning mistake without knowing of it? When people forget to update the beneficiary
designations for their life insurance policies, employment-sponsored retirement
accounts, IRAs, mutual funds and brokerage accounts, annuities, bank accounts,
and 529 college savings plan, they could be setting their family up for
an undesirable situation.
If you fail to update your beneficiary designations, when you die, your
assets could end up in the wrong hands, such as your ex-husband or wife,
or a non-profit organization that no longer exists, regardless of what
your will says.
If you’re like most people, you probably designated a beneficiary
10, 15, or even 20 years ago when you first took your job and signed up
for a retirement plan. Same goes for filling out payable on death (POD)
or transfer on death (TOD) certificates when you opened your bank accounts
and investment accounts.
probate attorneys all tend to agree on one thing: Circumstances change and in
effect, wishes change. If your wishes for your estate have changed since
first naming your beneficiaries, then it’s important to amend them
if they are out-of-date.
When beneficiary designations are inconsistent with a will, it can wreak
havoc on a well-drafted estate plan. While the chaos is usually unintentional,
it’s not always. There have been instances where children got themselves
named as beneficiaries on their parents’ accounts, disinheriting
their siblings and invalidating their parents’ will.
When to Update Your Beneficiaries
It’s wise to take a look at updating your beneficiary designations
whenever you have experienced a major life event, such as:
- You get divorced or remarried
- You roll over your retirement plan
- You have a child or a grandchild
- Your primary beneficiary dies
- Your beneficiary becomes disabled
- Your bank changes ownership
I recommend reviewing your beneficiary designations every year, even if
you don’t experience a major life change. Even something such as
having a falling out with an adult child or sibling, or realizing that
a beneficiary has a substance abuse problem may be reason enough to amend
one's beneficiary designations.
Contact me, David Whittaker, Attorney at Law today to schedule your
free case evaluation!