It’s likely you already have a comprehensive estate plan in place and probably spent hours contemplating the decisions you made in your plan. You also placed a great deal of thought towards the distribution of your estate assets, your choice for executor of your Will, Trustee of your Trust, and guardian for your minor children. You covered everything right? Well maybe not. All too often, people forget one important aspect of estate planning – beneficiary designations.
Although you may not realize it, beneficiary designations govern many of your most valuable assets. Life insurance policies, retirement plans, and investment and bank accounts, as well as mutual funds and brokerage accounts all may have beneficiary designations. In some states, like Maryland, even personal property, such as your vehicle, may carry a beneficiary designation. These designations dictate who will inherit the asset in the event of your death, not withstanding a provision to the contrary in your last Will and Testament or Trust agreement.
The problem with beneficiary designations is that we often forget about them. Frequently, a beneficiary designation is filled out as an afterthought without giving any consideration to how the designation fits into an overall estate plan. For example, when you opened your bank account you likely filled in a designated beneficiary; but do you even remember doing so? Do you remember who you designated? Or, when you filled out that stack of paperwork you were handed after being hired for your current job, you likely designated a beneficiary for your employer-sponsored retirement plan and life insurance policy. Again, do you remember designating a beneficiary? The answer is probably “no”. People fill out beneficiary designations all the time without giving the choice of beneficiary much thought. Unfortunately, the consequences can wreak havoc with your overall estate plan.
With that in mind, take some time to review who your designated beneficiaries are. Then, make a point to review those designations periodically and every time a life event calls for a review of your estate plan. If you have questions or concerns regarding your beneficiary designations, be sure to consult with an experienced estate planning attorney in your area to make sure the plan you’ve carefully put in place reflect your planning goals.
Latest posts by Colleen Sinclair Prosser, Estate Planning Attorney (see all)
- Beneficiary Designations Aren’t a True Substitute for a Trust - April 18, 2019
- Planning for the Unexpected - March 14, 2019
- Designating a Guardian for Minor Children - February 7, 2019