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Pay attention to beneficiary designations

On Behalf of | Jun 30, 2020 | estate planning | 0 comments

Many Californians understand the importance of a will. However, some may mistakenly believe that their will overpowers anything else that might determine the distribution of property and assets, such as the beneficiary designation forms for certain accounts. Both selecting and updating beneficiary designations is a critical part of estate planning that is frequently overlooked, and failing to do so can cause significant problems in the future.

Accounts with beneficiary designations

Accounts that have beneficiaries do not go through the probate process. This includes life insurance and retirement savings accounts, where the proceeds or funds are distributed to the beneficiaries according to the terms of the account. Many people make the mistake of thinking that their will covers these accounts and either do not pay attention or fail to select beneficiaries. Many do not even review beneficiary selections and, as a result, end up stuck with choices they made decades ago that may no longer apply to their life. Thus, a former spouse could end up receiving money if a person is not careful.

The importance of reviewing beneficiary designations

There are numerous contingencies that might be addressed if a person periodically reviews their designations. One should make an exhaustive list of every account they have had over the years. Then, they should make sure that the accounts have a designation. They could consider rolling over any orphaned retirement accounts to make it easier for them to track in the future.

It is necessary to establish an estate plan and then frequently review the plan over the years. Beneficiary designations are a part of this process. If a person does not have an estate plan or they want to change the one that they already have, they may contact an estate planning attorney. The lawyer may help them by coming up with an overall strategy and then executing it by drafting the necessary documents.