If you have a comprehensive estate plan in place already, you are ahead of over half the population in the United States. Clearly, you understand the importance of having an estate plan as well as the benefits derived from a well thought out plan. Don’t make the mistake, however, of thinking you no longer need to worry about your estate plan. For your plan to provide maximum benefits, it must be reviewed and revised from time to time. To illustrate this point, a Windsor Hills estate planning attorney from Collins Law Firm reminds you to update your beneficiary designations.
Beneficiaries in Your Estate Plan
One of the primary motivations for creating an estate plan is to ensure that assets are distributed according to the creator’s wishes, to beneficiaries chosen by the creator, at the end of his/her life. Beneficiaries, therefore, play a major role in most estate plans. Among the many places you might find beneficiaries in your own estate plan include:
- Last Will and Testament
- Living trust
- Testamentary trust
- Life insurance
- POD or TOD accounts
- Retirement accounts
- Social Security benefits
- Veterans benefits
When Might You Need to Modify or Update Your Beneficiary Designations?
Failing to update beneficiary designations is a very common estate planning mistake. Unfortunately, it is also a mistake that can wreak havoc on your estate plan. Every one of the examples above includes at least one beneficiary designation. If you fail to update that designation, and something happens to you, assets of yours may end up in the wrong hands – and it is too late to do anything about the error. To ensure that your assets wind up where you want them after you are gone, you should review your entire estate plan on a routine basis. Most estate planning attorneys recommend a routine review every three to five years until you reach about age 50 and then every five to seven years thereafter. There are also some events that should trigger a more immediate review of your beneficiary designations though, such as:
- Marriage – if you get married, you will probably want to ensure that your new spouse is financially secure should something happen to you. Never assume that he/she will have access to your assets simply by virtue of the marriage. Instead, actually make the necessary beneficiary designation changes.
- Divorce – in the midst of an emotional divorce it is often easy to forget about the practical ramifications of ending a marriage; however, failing to change your beneficiary designations after a divorce could mean your now ex-spouse ends up with your assets after your death.
- Birth of a child – some estate planning documents, such as your Will, may name children generically which, in theory, should include any future children you have. Nevertheless, it is always best to revise the beneficiary designations to specifically identify a child once he/she is born.
- Death of a beneficiary – a well-written estate plan will include secondary beneficiaries to cover situations wherein the primary beneficiary predeceases the creator; however, you should still make a point of reviewing that designation if a primary beneficiary passes away if for no other reason than to add a new secondary beneficiary.
- Estrangement – if, for any reason, you become estranged from a beneficiary, you may wish to remove that beneficiary from your estate plan.
- A child reaches the age of majority — your minor child cannot inherit directly from your estate. Once that child reaches the age of majority, however, you will likely want to change your beneficiary designations to include direct gifts to the child.
Contact a Windsor Hills Estate Planning Attorney
For more information, please join us for an upcoming FREE webinar. If you need to update the beneficiary designations in your estate plan, contact an experienced Windsor Hills estate planning attorney. Contact the Collins Law Group by calling (310) 677-9787 to register for one of our FREE estate planning workshops.