The importance of keeping beneficiary designations current

People in North Carolina who are creating an estate plan should make sure they remember to include beneficiary designations. These are the individuals who receive assets such as retirement accounts and life insurance policies, which do not have to go through probate. Since beneficiary designations are separate from the documents that people often think about when planning their estates, such as wills and trusts, it is not uncommon that they often are forgotten.

Even financial professionals may forget about this crucial aspect of estate planning. One woman who advised others about beneficiary designations and other estate planning strategies in her professional life discovered only after moving an IRA that she had not changed her beneficiary for many years. When she had young children, she divorced her husband. She then appointed her father as the beneficiary on her IRA so that he would be able to take care of her children if she died. However, it was only years after her children were grown and her father had remarried that she discovered she had never changed that designation.

A person who is unsure about who is listed as his or her beneficiary can contact the customer service department of the various financial accounts to find out. To change beneficiaries, a person may need to fill out a new form. If the previous beneficiary is a spouse, that spouse’s signature may be needed.

Even if someone specifies in a will or trust that a certain person should receive an asset, a beneficiary designation may override that document. All estate planning documents should be reviewed regularly and revised if needed. People also may want to talk to family members about the estate plan. This could help loved ones understand why certain choices were made and may reduce the chances of the estate plan being challenged during trust and probate administration or at other stages.