Comprehensive estate planning ensures that your wishes are carried out if you become incapacitated or pass away. For many people, this planning includes their will, a power of attorney, life insurance, and a healthcare directive. One important piece of the puzzle that is often overlooked is beneficiary designations.
If you have questions about estate planning or beneficiary designations, please contact us today.
USING BENEFICIARY DESIGNATIONS IN ESTATE PLANNING
You have the opportunity to name a beneficiary for most of your assets. Your life insurance policy requires you to designate a beneficiary. And you likely have a beneficiary named for your retirement accounts.
Checking and saving accounts can have a beneficiary that is not a joint owner on the account. This is often called a “payable on death” arrangement in which a named individual can only access the funds after your death.
At the heart of estate planning is the assurance that wishes are carried out. If your beneficiary designations are outdated, unclear, or conflicting, there could be litigation
COMMON MISTAKES PEOPLE MAKE WHEN NAMING A BENEFICIARY
It’s easy to make mistakes when you name a beneficiary. That’s why it’s so important to work with an estate planning law firm to ensure that all of your paperwork is complete, conflict-free, and aligns with your goals.
Some of the most common beneficiary mistakes that we see are:
- An ex-spouse or former partner is still listed as a beneficiary. After a break-up, many people forget to change their beneficiary on their retirement account, life insurance, and other assets. If, for some reason, you do want your former spouse to remain a beneficiary, this wish should be made crystal clear in your will.
- There is a conflict between a beneficiary designation and the will. Any time that you change or add a beneficiary, you’ll need to do that in two places: on the asset’s beneficiary form and in your will.
- You designated a charity that later closed down. In a perfect world, you would receive some type of notification when this happens, but things can fall through the cracks. When our attorneys do a review of your estate planning, we’ll look for these types of changes.
- One of your beneficiaries passed away. If your primary or contingent beneficiary dies or becomes incapacitated, you’ll need to change your designations. In the case of a death, you’ll want to add a new beneficiary. If the person remains mentally or physically incapacitated, you may want to consider a trust in their name.
- A beneficiary becomes incarcerated. If your beneficiary is in jail or prison, you may need to reconsider this beneficiary. You should take into account how long their expected sentence is. You should also be aware of any fines or settlements they will have to pay out. Inheriting any assets may make life more complicated for them in the long run. Our attorneys can help you understand your options to provide for a loved one who is incarcerated.
- You have a change of heart. Perhaps you had a falling out with someone you named as a beneficiary. Or, maybe they’ve proven that they’re irresponsible and will only waste their inheritance. You can always change your beneficiary designations as you see fit.
There are countless more errors and omissions that can happen with beneficiary designations. That’s why it’s so important to review your estate planning annually, or any time your beneficiaries experience a life change.
ESTATE PLANNING ATTORNEY IN WORCESTER, MA
Serving all Worcester and Surrounding Areas
Hi, my name is Polly Tatum…
I help people protect what they care about most. If you are ready to start getting your estate plan in place and figure out your beneficiaries, I can help.
As with most things in life, the more prepared you are, the better off you’ll be.
Whether you have already started thinking about how you want your estate to be handled, or you are just now realizing you need a plan, you have come to the right place.
Let’s get started.