You want to ensure the your plans are carried out for your loved ones when you are no longer here, and your will is the powerful tool you have for this very reason. But a will is rarely and one-and-done deal – it should be updated regularly to reflect life changes as they occur. You'll also want to make sure your beneficiary designations and your overall estate plan coincide so they work together instead of being in conflict.
Beneficiary forms seem simple, and they generally are. Just to be on the safe side, however, you may want to read a recent article in The Slott Report titled “Beneficiary Form Review: The Gift That Keeps on Giving.”
Essentially, designating a beneficiary or beneficiaries on a beneficiary form can allow you to exempt a given account or policy entirely out of your “probate” estate. However, when you avoid probate your will has no control over who inherits such account or policy. So by not reviewing and updating your beneficiary forms to keep up with your life changes or significant events, you risk leaving your assets to the wrong beneficiary (for example, an ex-spouse on your 401k plan).
Another troubling scenario may arise if you think certain assets will be distributed through your will, when in reality the assets will pass via beneficiary designation. This may cause one or more of the beneficiaries named in your will to receive less than you intended, since the "non-probate" assets will not be included.
The take-a-way? Perform a beneficiary form audit of your accounts to ensure they are consistent with your wishes, and to make sure that your benefiary designations and will provisions are coordinated and up to date. Contact your estate planning attorney for assistance.
For more information on how to create a coordinated estate plan using both beneficiary designations and your will, please contact us at Peak Legal Group.
Reference: The Slott Report (February 18, 2013) “Beneficiary Form Review: The Gift That Keeps on Giving”