If you have an estate plan in place already, you already understand the importance of careful and thorough estate planning. Taking the time to create that plan, however, is only the first step toward protecting everyone and everything that is important to you. For the estate plan you created to function as intended, it must be modified from time to time. That may require you to add or delete estate planning tools or even entire components. It can also require you to update beneficiaries as explained by the Los Angeles estate planning attorneys at Schomer Law Group, APC.
Beneficiaries Are Everywhere in Your Estate Plan
While your estate plan can also achieve a wide range of additional goals, the primary goal of most plans is to ensure that assets are distributed according to the wishes of the creator after his/her death. Within that over-arching goal is the desire to make sure that loved ones are financially secure in your absence. That means that many of your estate planning documents/components will include at least one beneficiary, including a:
- Last Will and Testament
- Trust agreement
- 401(k) or IRA
- Life insurance policy
- Financial accounts
- Investment accounts
When Do Beneficiaries Need to Be Updated?
Your entire estate plans should undergo a routine review and revision every few years to make sure it reflects your current goals and wishes. When you conduct a routine review of your estate plan, make sure you pay attention to your beneficiary designations to keep them up to date. There are certain events or triggers, however, that should prompt you to make a more immediate modification to the beneficiary designations within your estate plan, such as:
- Birth of a beneficiary. Ideally, your existing plan documents should account for future (not yet born) beneficiaries with generic, inclusive language, such as “descendants.” Nevertheless, it is always better to use a beneficiary’s actual name once he/she is born to alleviate the possibility of confusion and reduce the likelihood of litigation down the road.
- Death of a beneficiary. The same is true in the case of a beneficiary who passes away. Your existing plan should contemplate the possibility by including successor beneficiaries and/or providing instructions for how the assets should be handled in the event of a beneficiary’s death. Nevertheless, if you are aware of the death of a beneficiary it is always best to update your designations to make the successor the primary beneficiary and to name a new successor or make alternative plans for the assets involved in light of the beneficiary’s death.
- Marriage. Clearly, you will want to review and update your beneficiaries if you get married; however, the marriage of an adult child might also prompt you to add, or remove, a beneficiary, depending on your feelings about your new son or daughter-in-law.
- Divorce. If you go through a divorce, you will likely want to update your beneficiaries as soon as possible to ensure that your now ex-spouse doesn’t inherit your entire estate. Consult with your estate planning and/or divorce attorney first, however, as you may not legally be able to change a beneficiary until the divorce is finalized.
- Beneficiary reaching the age of majority. Your minor child cannot inherit directly from your estate. As such, you may have a trust in place to protect the assets earmarked for your minor child. If your child has reached adulthood, however, it is now possible to add your child in as a direct beneficiary throughout your estate plan if you choose to do so.
- New accounts/policy/document. In the barrage of paperwork that is often thrust upon a new employee, it can be easy to overlook documents. That can lead to failing to name beneficiaries on retirement, investment, and financial accounts, causing the assets held in the account to become part of your intestate estate.
Contact Los Angeles Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about the need to update beneficiary designations in your estate plan contact the experienced Los Angeles estate planning attorneys at Schomer Law Group APCby calling (310) 337-7696 to schedule an appointment.
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