Have You Thought about Your Beneficiary Designations Lately?
One of the most frequently overlooked aspects of estate planning is the completion and correct use of beneficiary designations. Very simply, a beneficiary designation provides instruction as to how your assets will be distributed upon your death. Almost all bank accounts, brokerage accounts, 401(k)s, and retirement accounts allow for the naming of a beneficiary.
It is not uncommon for our firm to prepare estate plans that include the creation of a trust in order to hold assets of the decedent. In some circumstances, individuals want their assets held in trust until their children reach a certain age, or they want their assets used for a specific purpose. Naming a trust as a beneficiary can thus ensure that a specific account will be funneled to the trust so that the distribution provisions in the trust can control the disbursement of assets.
We frequently meet with clients who submitted beneficiary designations when they opened an account, but have not reviewed the beneficiary designation since. A marriage, a divorce, birth of a child, or death of a family member are all reasons to verify that your beneficiary designations are up to date. We tell all of our clients that estate planning is a continuing process, and an estate plan should be reviewed regularly. Similarly, beneficiary designations are in important facet of estate planning, and they too should be reviewed regularly.