Last week I had an opportunity to sit with a new client who said it had been several years since he had reviewed his estate plan. During that time he had lost his wife and one of his children had married and had a child. As part of our review process, we look at his life insurance policies, retirement plans and transfer on death designations for several of his accounts. Much to his shock, he hadn’t updated the beneficiary designations on these accounts to reflect the changes in his life as his late wife was still named as beneficiary on all of these accounts.
Reviewing your beneficiary designations on a regular basis is imperative to ensure that they accurately reflect your wishes and support your estate planning goals.
Have You Checked Your Beneficiary Designations Lately?
Do you own any life insurance policies? If so, have you named both primary and secondary beneficiaries for your policies?
How about retirement accounts – are any of your assets held in an IRA, 401(k), 403(b) or annuity? Or how about a payable on death (“POD”) or a transfer on death (“TOD”) account? If so, have you named both primary and secondary beneficiaries for these assets?
What about your vehicle – do you have it registered with a TOD beneficiary? And your real estate – is it held under a TOD deed or beneficiary deed?
If you have gotten married or divorced, had any children or grandchildren, or any of the beneficiaries you have named have died or become incapacitated or seriously ill since you made beneficiary designations, it is time to review them all with your estate planning attorney.
Beneficiary Designations May Overrule Your Will or Trust
Speaking of estate planning attorneys, has yours been given and reviewed all of your beneficiary designations?
It is critically important for your estate planning attorney to review your beneficiary designations as your life changes because your beneficiary designations may overrule or conflict with the plan you have established in your will or trust (unless your state law provides otherwise, but you should certainly not rely on this). Also, naming your trust as a primary or secondary beneficiary can be tricky and should only be done in consultation with your estate planning attorney.
What Should You Do?
Whenever you experience a major life change (such as marriage or divorce, or a birth or death in the family) or a major financial change (such as receiving an inheritance or retiring) or are asked to make a beneficiary designation, your beneficiary designations should be reviewed by your estate planning attorney and, if necessary, updated or adjusted to insure that they conform with your estate planning goals.
If you have gone through any family or monetary changes recently and you’re not sure if you need to update your beneficiary designations, then consult with your estate planning attorney to ensure that all of your bases are covered.