Slam the Gavel Blog
|Posted by Matthew J. Hornsby on May 16, 2012 at 3:35 PM|
Yesterday's post was the first in a series of common pitfalls that you should avoid when dealing with your estate planning process. Today's pitfall is one that most of us know about, but many neglect anyways.
Not routinely checking/adjusting your beneficiaries of life insurance policies, retirement plans, etc.
Things change. Divorce happens. Loved ones pass away. Children are born. Because of this, it is important to periodically review the named beneficiaries on your assets, especially after a life changing situation (good or bad). When dealing with estate planning, some of your assets will be arranged so that they avoid probate, or in other words take care of themselves, without your Will deciding where the asset goes. An example we are all aware of is life insurance. If you have a named beneficiary on the policy, such as your spouse, the proceeds will pass to that person directly upon your death. Many retirement plans, pensions, bank accounts, real property, and other assets are the same way. Often, a spouse has a statutory right to certain assets, even if you name another person as beneficiary. If you are not clear about the beneficiary on any of your accounts or assets, call the financial institution holding the asset and find out.
State law may kick in to automatically disqualify a divorced spouse from being a beneficiary, but it may not. Even if it does, that just means the asset now has no beneficiary at all and a whole other set of issues crop up. The best advice is to periodically review your beneficiaries to make sure they align with your current wishes.