Have You Updated Your Beneficiaries Lately?

Taking the time to create an estate plan is only the first step toward protecting everyone and everything that is important to you. You must also update your plan for it to be successful and work as intended. One thing people often forget is to review and revise their beneficiary designations within their estate plans. To keep you from making that mistake, the Phoenix estate planning lawyers at Morris Hall PLLC explain when and why you need to update your beneficiary designations.

Estate Plan Beneficiaries

For many people, their loved ones are the reason why they create an estate plan in the first place. As such, beneficiary designations are likely found throughout your estate plan. For example, you will likely have designated beneficiaries in your:

• Last Will and Testament
• Trust agreement
• 401(k) or IRA
• Life insurance policy
• Financial accounts
• Investment accounts

When Should Beneficiary Designations Be Reviewed?

You should routinely review and revise your plan to ensure that it works as intended.  Although there is no universally accepted time frame, most estate planning attorneys suggest that you routinely review your estate plan every three to five years throughout your working years and then every five to ten years thereafter. You need to review your plan more often when you are younger because major life changes are more likely to occur during that time. When you conduct a routine review of your estate plan, make sure you pay attention to your beneficiary designations to keep them up to date. Whether during a routine review, or outside of a routine review, some of the most common reasons you might realize you need to make changes to your beneficiary designations include:

• Birth of a beneficiary. Your existing plan documents should account for future beneficiaries with generic, inclusive language, such as “descendants.” Nevertheless, it is always better to use a beneficiary’s actual name once born to alleviate the possibility of confusion and reduce the likelihood of litigation.
• Death of a beneficiary. Once again, your existing plan should contemplate the possibility of a beneficiary predeceasing you by including successor beneficiaries or providing instructions for how the assets should be handled in the event of a beneficiary’s death. Nevertheless, if you are aware of the death of a beneficiary it is always best to update your designations to make the successor the primary beneficiary and to name a new successor.
• Marriage. You may have already recognized the need to update your beneficiaries if you get married; however, the marriage of an adult child might also prompt you to add, or remove, a beneficiary, depending on your feelings about your in-law.
• Divorce. If it is your own divorce, you want to update your beneficiaries as soon as possible to ensure that your now ex-spouse doesn’t inherit your entire estate.
• Beneficiary reaching the age of majority. Because a minor child cannot inherit directly from your estate, you may have a trust in place to protect your child’s inheritance. If your child has reached the age of majority, however, it is now possible to add your child in as a beneficiary throughout your estate plan.
• New accounts/policy/document. A surprising number of people simply forget to name beneficiaries on retirement, investment, and financial accounts. This can cause the asset held in the account to be held up in probate instead of going straight to loved ones in the event of your death.

Contact Phoenix Estate Planning Lawyers

For more information about how to keep your estate planning details private, please join us for an upcoming FREE seminar. If you have additional questions about estate planning, contact the experienced Phoenix estate planning lawyers at Morris Hall PLLC by calling 888-222-1328 to schedule your free consultation today.