Your estate plan should be a significant tool used to protect everyone and everything that is important to you. To achieve that goal, however, you cannot simply create your estate plan and forget about it. On the contrary, it requires continues review and revision to ensure that it accurately reflects your wishes. One part of a comprehensive estate plan that is often overlooked during a review are the beneficiary designations. With that in mind, the Coral Gables estate planning attorneys at Stivers Law encourage you to consider whether your beneficiary designations are current and reflect your intentions.
Where Might I Find Beneficiaries in My Estate Plan?
The desire to provide for your family and loved ones was likely a motivating factor in the initial creation of your estate plan. That means that beneficiaries are likely found in numerous places within your estate plan. For example, you will likely have at least one beneficiary associated with:
- Last Will and Testament
- Trust agreement
- 401(k) or IRA
- Life insurance policy
- Financial accounts
- Investment accounts
Keeping Your Beneficiary Designations Current
You should routinely review and revise your plan to ensure that it works as intended. Although there is no universally accepted time frame, most estate planning attorneys suggest that you routinely review your estate plan every three to five years throughout your working years and then every five to ten years thereafter. You need to review your plan more often when you are younger because major life changes are more likely to occur during that time. When you conduct a routine review of your estate plan, make sure you pay attention to your beneficiary designations to keep them up to date. Whether during a routine review, or outside of a routine review, some of the most common reasons you might realize you need to make changes to your beneficiary designations include:
- Marriage. You may have already recognized the need to update your beneficiaries if you get married; however, the marriage of an adult child might also prompt you to add, or remove, a beneficiary, depending on your feelings about your in-law.
- Divorce. If it is your own divorce, you want to update your beneficiaries as soon as possible to ensure that your now ex-spouse doesn’t inherit your entire estate.
- Birth of a beneficiary. Your existing plan documents should account for future beneficiaries with generic, inclusive language, such as “descendants.” Nevertheless, it is always better to use a beneficiary’s actual name once born to alleviate the possibility of confusion and reduce the likelihood of litigation.
- Death of a beneficiary. Once again, your existing plan should contemplate the possibility of a beneficiary predeceasing you by including successor beneficiaries or providing instructions for how the assets should be handled in the event of a beneficiary’s death. Nevertheless, if you are aware of the death of a beneficiary it is always best to update your designations to make the successor the primary beneficiary and to name a new successor.
- New account/policy/document. A surprising number of people simply forget to name beneficiaries on retirement, investment, and financial accounts. This can cause the asset held in the account to be held up in probate instead of going straight to loved ones in the event of your death.
- Beneficiary reaches adulthood. Because a minor child cannot inherit directly from your estate, you may have a trust in place to protect your child’s inheritance. If your child has reached the age of majority, however, it is now possible to add your child in as a beneficiary throughout your estate plan.
Contact a Coral Gables Estate Planning Attorney
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about keeping your beneficiaries current in your estate plan, contact an experienced Coral Gables estate planning attorney at Stivers Law by calling (305) 456-3255 to schedule an appointment.
Justin serves as a member of the American Academy of Estate Planning Attorneys (AAEPA), a national organization comprised of legal professionals concentrating on estate planning. As a member of the Academy, he receives ongoing, comprehensive training on modern estate planning techniques.
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