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  • Writer's pictureJose Roman

Have you updated your beneficiaries? Don't leave your family hanging.

By: Jose Roman



Not every part of your estate plan is addressed in your Will or Living Trust document. In fact if you have a retirement account such as an IRA, 401k, pension plan or life insurance policy their mention in your estate planning documents will not determine who inherits those accounts after your death. The reason is because these types of accounts allow you to name a beneficiary who will inherit the account from you that cannot be overridden in your Will or Trust document.

It is important that you regularly updated your beneficiary designations to ensure they are in line with the rest of your estate plan. It's possible that a beneficiary designation along with the rest of your estate plan can result in one family member receiving more than you initially intended them to receive. For example let's say you name your daughter as the beneficiary of a life insurance policy valued at $100,000. You also have named her to share 50/50 in the rest of your estate with your son. Your estate is valued at $1,000,000. Both of your children will receive $500,000 each, but your daughter will also receive the $100,000 life insurance policy. Leaving her with $600,000 and your son with $500,000. If that is the outcome you were seeking then all is good, if it's not you then you may have left one of your children confused about why you made that decision, with no opportunity to question you.

The above example illustrates the importance of treating your will or trust and beneficiary designations as two parts of one comprehensive estate plan and not as separate pieces. Viewing them in this way allows you to draft your will or trust in a way to takes into account your beneficiary designations and equalize your estate among your family, and in the case of a trust, you can name the trust as a beneficiary so that the terms of the trust will dictate who benefits after payment is made to the trust without having to figure out how to equalize other aspects of your plan.

Don't overlook your beneficiary designations. If you need help with your estate plan visit www.romanestatelaw.com/book-online to book your estate planning consultation today.

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