It seems, doesn’t it, as if your estate planning is never just done. There’s no magic solution to arranging your estate plan and leaving it alone.

Because life goes on, things happen, relationships change. And, as they do, your estate planning needs change with them.

I want to talk about the vital importance of updating beneficiary statements on a regular as well as an as-needed basis.

You should have primary and contingent beneficiaries designated on all:

• Individual retirement accounts (IRAs)
• Employer-sponsored accounts, such as pensions, 401(k)s, 403(b)s, 457(bs), ESOPs, etc.
• Life insurance policies
• Disability insurance policies

It’s crucial that these designated beneficiaries be reviewed and updated to ensure that the designations align with your current estate plans. Did you know that, according to Supreme Court precedent, beneficiary designations trump your will’s stated intentions?

In that legal case, a husband and wife divorced. The wife had been designated as primary beneficiary on her husband’s retirement account. During the divorce, the wife renounced her claim to the account, but, since the husband never changed the beneficiary designation, after his death the Court ruled that the beneficiary designation was valid and in force. The ex-wife got it all, while the husband’s second wife and their children were cut off entirely from that asset.

Unfortunately, the story of the woes caused by outdated beneficiary designations does not stop with that case – there are too many misfortunes to list.

Review your beneficiary designations upon:

• Marriage (whatever number that makes)
• Divorce
• The birth of a child or grandchild
• The death of a family member (even if that person is not one of your designated beneficiaries – contemplating such a death may change your wishes)
• If a plan administrator changes (sometimes glitches occur when systems change over)

Even when you think nothing’s changed, it’s a good idea to review your entire estate plan every 2 to 3 years, including your beneficiary designations. People move, telephone numbers change – even if the right people are designated, keep their contact information updated.

Think of your estate plan as an engine, driving your assets to their proper destination(s). Complete with many moving parts, all of which require attention, maintenance, and perhaps repair.

And consider regular review of your estate plan like a turn-up for your car – every so often, it’s necessary.

Review your:

• Beneficiary designations
• Last Will and Testament
• Powers of Attorney, both medical and durable
• Any accounts or assets for which you have put in place “Pay on Death” or “Transfer on Death” designations

The best way to review your estate plan is to go over it with your financial advisor, whether this is your CPA, estate attorney, or Virtual CFO – s/he can help you navigate the complex process which is estate planning.

If you wonder whether your estate plan might need updating, there’s a good chance it does. Please click here to email me directly – RFG is here to help you!

Until next time –

Peace,

Eric