Estate planning encompasses many different aspects of covering all of your concerns, including not just your will or the creation of a trust, but proper documentation of beneficiaries on accounts such as life insurance policies or retirement accounts.
Although Social Security benefits maintain an automatic survivor benefit, retirement plans like your IRA require the owner of the account to select their own beneficiaries. Certain plans may also have additional requirements, such as a spousal waiver or consent to make changes. In the event that you do not name a beneficiary on your retirement account, that account then goes into your estate and gets processed through probate.
If you complete proper beneficiary designation forms. However, and continue to keep these updated through important life changes such as the birth of a child, a divorce, or a subsequent marriage, you can keep your retirement account out of probate and ensure a speedy transfer to the intended beneficiary.
Note that you can usually name a primary beneficiary (your first choice) and a secondary beneficiary. This covers your plan in the event something happens to your primary beneficiary.
One of the most common estate planning mistakes is to overlook the updating of these materials after a major change in your life, the company is responsible for distributing to the beneficiary on file. So even if you intended something different or articulated something distinct in your will, you must also update these materials with the retirement account company directly.
Talk to our Pasadena estate planning attorneys if youโre curious about aligning your beneficiary designations with other aspects of your plan, such as a trust or a will.
