Estate Planning as a Career

Quick, who is the beneficiary in your IRA, how about your 401(k) and life insurance? The truth is that most people, depending on how long it’s been since they designated the beneficiaries on their accounts, probably don’t know off the top of their heads. What they don’t know is that an incorrect or non-existent beneficiary can cause you and your heirs a lot of trouble.

Review Beneficiaries When Your Life Changes

Most people give considerable thought to who they’ll name as beneficiary when they originally establish their retirement accounts or purchase their life insurance. The problems arise when, over time, those designations are no longer valid. You may have named your spouse at the time you signed up for your 401(k), but she, unfortunately was 2 spouses ago. How do you think your current spouse will feel when she finds out your ex is entitled to your 401(k) and not her? Granted, you won’t be around to deal with the aftermath, but your passing is already stressful enough, without the added stress of a court fight over your estate.

So how often should you review your beneficiary designations? At least annually, and certainly when you have a life change such as a job change, birth of a child, divorce or re-marriage. In this way, you’ll be sure your beneficiaries reflect your current circumstances.

Why Name a Beneficiary At All?

Naming a beneficiary on your retirement accounts and life insurance policies allow those assets to pass to the beneficiary outside of probate. As we’ve discussed before, probate is a long, slow, expensive and PUBLIC process of determining where your assets go upon your death. With a beneficiary designation, no matter what your will says, the beneficiary designation takes precedent. So, even if you’ve changed your will to cut out your estranged son, if he is still lis (more…)