Over the course of your lifetime you have probably made numerous beneficiary designations. Some, like those in your Last Will and Testament, you likely put a considerable amount of thought into. Others you may have made without much thought and have since forgotten about. Forgotten beneficiary designations, however, can wreak havoc with your estate plan. Because of this, it may be time to update your beneficiary designations. The following documents may require your attention:
Life Insurance Policies/Retirement Plans– Employers frequently offer life insurance benefits at group rates to the employees or retirement plans as part of a benefit package. You may have accepted a life insurance policy or signed up for a retirement plan from an employer that is still in effect yet you left that employer many years ago. The details of even recently purchased life insurance policies are often forgotten. If you named a spouse as the beneficiary of a life insurance policy or retirement plan and have since divorced that spouse, the proceeds will still go to your now ex-spouse unless you change the beneficiary designation. In addition, if your children were young when you made your beneficiary designations but are now past the age of majority, you may wish to make them direct beneficiaries at this point.
Last Will and Testament/Trusts – There are obvious reasons to change beneficiaries in a Will or Trust, such as a divorce or death, but a birth may also be cause to update beneficiary designations. People often use generic terms such as “heirs” to leave gifts to beneficiaries in a Will or trust. While this is acceptable, it is best to use full names when possible. For example, when a new child is born, you should update your Will with the child’s complete name.