Creating a comprehensive estate plan is something that every adult should consider a priority. If you already have your estate plan in place, you are ahead of the majority of Americans. That does not mean, however, that you can rest on your laurels. On the contrary, once you have an estate plan in place you must make sure that plan stays current because an out of date estate plan is almost as dangerous as the absence of a plan. Specifically, a Waukegan estate planning attorney at Hedeker Law, Ltd., urges you to keep your beneficiary designations current.
Where Might You Find Beneficiaries in Your Estate Plan?
If you are like most people, a primary motivation for creating your estate plan in the first place was to ensure that your estate assets are distributed according to your wishes to the people, organizations, and other beneficiaries (such as the family pet) of your choosing after you are gone. Your beneficiaries, therefore, are likely the central players in your estate plan. Among the many places you might find beneficiaries in your estate plan include:
- Last Will and Testament
- Living trust
- Testamentary trust
- Life insurance
- POD or TOD accounts
- Retirement accounts
- Social Security benefits
- Veterans benefits
When Should You Modify or Update Your Beneficiary Designations?
Far too many people go to the trouble of creating an estate plan, and then promptly forget about it. Failing to update a plan, in general, is one of the most common estate planning mistakes. Failing to make sure beneficiary designations are current, in particular, can be a particularly detrimental mistake as it can wreak havoc on your estate plan. Every one of the examples above includes at least one beneficiary designation. If you fail to update that designation, and something happens to you, assets of yours may end up in the wrong hands – and it is too late to do anything about the error. To ensure that your assets wind up where to want them after you are gone, you should review your entire estate plan on a routine basis. Most estate planning attorneys recommend a routine review every three to five years until you reach about age 50 and then every five to seven years thereafter. There are also some events that should trigger a more immediate review of your beneficiary designations though, such as:
- Birth of a child – some estate planning documents, such as your Will, may name children generically which, in theory, should include any future children you have. Nevertheless, it is always best to revise the beneficiary designations to specifically identify a child once he/she is born.
- Marriage – if you get married, you will probably want to ensure that your new spouse is financially secure should something happen to you. Never assume that he/she will have access to your assets simply by virtue of the marriage. Instead, actually make the necessary beneficiary designation changes.
- Divorce – in the midst of an emotional divorce it is often easy to forget about the practical ramifications of ending a marriage; however, failing to change your beneficiary designations after a divorce could mean your now ex-spouse ends up with your assets after your death.
- Death of a beneficiary – a well-written estate plan will include secondary beneficiaries to cover situations wherein the primary beneficiary predeceases the creator; however, you should still make a point of reviewing that designation if a primary beneficiary passes away if for no other reason than to add a new secondary beneficiary.
- A child reaches the age of majority — your minor child cannot inherit directly from your estate. Once that child reaches the age of majority, however, you will likely want to change your beneficiary designations to include direct gifts to the child.
- Estrangement – if, for any reason, you become estranged from a beneficiary, you may wish to remove that beneficiary from your estate plan.
Contact a Waukegan Estate Planning Attorney
For additional information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about updating your beneficiary designations, contact an experienced Waukegan estate planning attorney at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.