There is one estate planning concern that is shared by people from all income brackets—the decision of who gets what when you’re gone. Keeping the beneficiaries on your retirement, insurance or other investment accounts up to date probably isn’t on the top of your “to do” list…but I cannot stress enough how important it is.
While some individuals logically assume that a will is the official forum to express such decisions, that’s not always the case. If you pass away, it’s not your will that determines who inherits your life insurance policies, employer-sponsored retirement plan accounts and IRAs… it’s your beneficiary designations.
When was the last time you reviewed the beneficiaries on your accounts?
Life events can change everything. If you were married, divorced, had a child, or a death in the family since you opened your account, then you definitely need to consider updating your beneficiary designations.
When naming beneficiaries, remember to consider:
The age of the beneficiary.
Many policies and plans will not directly transfer assets to minors until a trustee or guardian is approved by a court.
The ability of the beneficiary to manage assets.
Perhaps a trust set up in the person’s name would be better than a direct transfer.
Employer-sponsored retirement plans.
Unless expressly waived by the spouse in writing, the law requires a spouse to be the primary beneficiary of the account.
Naming contingent beneficiaries.
Should something happen to your primary beneficiary, the contingent beneficiary would receive your assets.
Take the time now to make sure the parties you designated as beneficiaries on your accounts are the ones you want to receive your money.