Remembering Your Beneficiaries
When we think about our estate plan, the first thing that comes to mind for many of us is our will and maybe our living trust. Don’t forget, we also need to think about our retirement accounts and insurance policies.
Many of us put a lot of effort into our wills and trusts, making sure everything is just right and doing our best not to miss any detail. Often, though, we forget about our retirement accounts and the importance of naming and reviewing our beneficiaries. For many people, these beneficiary designations are equally important for assets that may not be covered by a will or living trust.
Here are a few things to think about when reviewing or naming beneficiaries:
- Name Beneficiaries – This is important. Some assets pass by beneficiary designation avoiding probate. Without that beneficiary designation, those same assets are now subject to probate, which can lead to delays and extra expenses. It’s also important to remember Primary and Contingent beneficiaries. If your primary beneficiary predeceases you and you don’t have a contingent beneficiary, your non-probate asset becomes a probate asset.
- Life Changes… Do Your Beneficiaries? – Beneficiaries should be reviewed regularly, but also when we experience life events. Marriage, divorce, births and death can all trigger possible beneficiary updates. If you have multiple beneficiaries and you would like their share equal, think about how your assets may change over time. In this case it’s a good idea to equally designate your beneficiaries on each account.
- Naming Your Estate – This is another example of taking your non-probate asset and making it subject to probate and the ability to stretch distributions for your IRAs and other qualified plans may be lost. Because an estate does not have a life expectancy, the IRA may be required to make taxable distributions over a much shorter period of time.
- … or a Trust – If you are interested in naming a trust as your beneficiary, discuss your options with your attorney and/or CPA. There are many things to consider before choosing a trust and they can help identify those situations where designating a trust works best. Those situations often involve minor children as beneficiaries.
- Talk to your Attorney – It is always a good idea to review your beneficiary designations with your attorney. You want to make sure all parts of your estate plan work together and they can help make sure your beneficiary designations are written to act as you intended.
If you have any questions on your current beneficiary designations or how you can update them, please feel free to call us and we can help ensure they are as you intended them to be.