If you participate in a 401(k) or other retirement plans, have one or more IRA accounts or life insurance policies, you should know that you need to designate beneficiaries that will receive the benefits or proceeds in the event of your death.
But designations can be confusing, and unintended and costly consequences can result if they are misunderstood, made incorrectly, or not made at all. And the shocking truth is that your estate plan on its own may not be able to help rectify any unintended issues that arise after you’re gone. That’s right. For example, even if your divorce judgment says that your ex-spouse should not be the beneficiary of your life insurance benefits, and your estate plan designates someone else as the beneficiary, the life insurance company will pay your ex the death benefits. And you will no longer be here to object. They will obey the beneficiary designation form on file.
So, what do you need to do and know right now to ensure that your wishes are followed?
First, you need to create an estate plan. Choose an experienced lawyer that listens to your concerns and helps you create a plan that looks at everything – your wishes, sizes of your estate, family dynamics, and concerns.
Second, take the time to review all your beneficiary designations. Please be aware that if your estate planning attorney does not discuss this important task with you, it’s a big indicator that they are not providing comprehensive estate planning services. Reviewing your designations is especially crucial to do if it’s been years since you acquired your life insurance policy or retirement accounts. But even if you recently acquired them, you’ll need to make sure that they align with your estate plan.
For proper maintenance, you may need to make changes to these designations when you change your estate plan, after the death of intended beneficiaries, after a divorce, or as a result of changes in relationships with beneficiaries.
A holistic estate plan should look at your assets like homes and bank accounts, as well as life insurance policies and retirement accounts. Simply having a Will or Living Trust does not cover all the bases. Your loved ones may not benefit from your assets the way you assume or intended them to.
If you don’t have an estate plan yet, we’d love to help you get it done. If you have a plan that hasn’t been reviewed or updated, we can help with that too so that it still works according to your wishes. Please book a consultation online or give us a call.
Meza Talbott Law
A Family + Estates Firm
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