Many people don't realize that their beneficiary designations on retirement accounts (IRAs, 401Ks etc.) and life insurance policies override a will or trust. That's why, in addition to a thoughtful will or trust, your beneficiary designations should always be up-to-date. Outdated beneficiary designations could create chaos for your family after you're gone.
For example, let's say your will calls for your estate to be divided equally among your three children. If you have an insurance policy you purchased many years ago before you were even married - naming your brother as beneficiary -- then he, not your children, will inherit that asset. Oops!
When you sit down with your estate planning attorney to draft your estate plan, you should examine the beneficiary designations on your retirement accounts and insurance policies, making sure the designations are in synch with your estate planning goals. Continue to consider those designations whenever you review your plan. At The Karp Law Firm, we recommend that our clients review their plans every three years, or sooner if there has been any significant change in health, financial or family circumstances.
To read more about beneficiary designations, click here.
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