Changing Beneficiary Designations
Posted on Feb 7, 2014 8:05am PST
All experienced
estate planning attorneys know how beneficiary designations play an important role in
the estate planning process. Oftentimes a large portion of a client's
wealth is controlled by various beneficiary designations. For example,
a portion of a client's wealth may be controlled by life insurance
with beneficiary designations or by financial accounts with "transfer
on death" or "payable on death" designations.
Estate planning is an ongoing process in which updating beneficiary designations
may need to be done periodically. The client may have married or divorced,
or they may have welcomed new children to their growing family, whereas
others may have had a falling out with an adult child or a sibling, or
there may have been a death in the family.
For some, it is common practice to draft an estate plan and file it away
in a drawer for safekeeping, where the documents sit for decades. We cannot
stress enough how important beneficiary designations are, especially since
a large portion of a client's wealth is often controlled by beneficiary
designations.
When someone designates a beneficiary on their 401(k) when they get hired,
or when they name their spouse as a beneficiary on their life insurance
policy when they first get married, as the years go by these designations
may be long-forgotten.
It's not unusual for a person to make a designation early in life and
to forget all about updating it. In some cases a state statue may save
the day, but in others it may not.
Keep in mind that certain assets such as qualified plans, IRAs, bank accounts,
and life insurance policies allow you to select a specific beneficiary.
When you designate a beneficiary, those assets will pass to the named
beneficiary upon your death, without the need for probate. It's very
important to review these designations periodically and as your life changes
to make sure you update them accordingly.
Need help with estate planning and either establishing or changing beneficiaries?
Contact a
Riverside estate planning attorney from
Dennis M. Sandoval, a PLC by calling (951) 968-0980 today!