When updating their estate plans, most people remember to double-check the contents of their wills and make sure that their medical directives accurately state their wishes. But fewer remember to double-check the beneficiaries listed on their trusts, IRAs, 401(k)s, and life insurance policies.
A beneficiary is a person (or entity) to whom your assets will be distributed after your death. If you neglect to update your list of beneficiaries, you can cause an expensive legal mess for family members and loved ones. For instance, let’s say you go through a messy divorce – your spouse alienates not only you but also your children by remarrying an untrustworthy person – but you neglect to remove your ex from your list. Alternatively, what if your youngest child gets involved in drugs or alcohol or just spends money foolishly on business ventures? While you might still want to leave him assets, you want to establish controls on how and when he obtains funds, so he won’t spend frivolously or allow a dubious business partner to raid them.
Here are some important frequently asked questions about this process:
How do I check my beneficiaries?
They should be listed clearly in the paperwork you received when you set up your retirement accounts, created your trusts, or established your life insurance policies.
How do I change who my beneficiaries are?
The process varies, depending on the type of asset and the institution that holds or manages it. For instance, your life insurance company may require you to file a “change of beneficiary” form in order to name or change the beneficiaries on the policy. Your bank, however, may allow you to change your beneficiary’s name simply by asking to do so while you are at the bank or by completing an online form.
Generally speaking, the terms of the insurance policy, account, or trust will detail the process by which changes to beneficiaries occurs. You may need to sign a form or provide other identification to demonstrate that you are the person with the right to make changes.
Can I just name my estate as beneficiary?
Simply naming your estate as the beneficiary may force your family to take the assets to probate after you die – kicking off a legal process that generates unnecessary bills and delays, only to have a judge make the final decision regarding your assets. Instead, talk to a qualified Arkansas estate planning lawyer to make sure that your assets go to the people you want to receive them. Our team is standing by to help. Call us at 501-221-7776 for a strategic consultation.