While your last will and testament is an essential component of your estate plan, it is not the only tool in your arsenal. Many assets have beneficiary designations, which list the beneficiaries that you wish to receive those funds after you die.
Retirement accounts, life insurance policies, and annuities are just a few of the assets that come with beneficiary designations. Here are a few tips to help you avoid common mistakes when it comes to your estate plan.
Double-check documents
You must fill in the exact correct name for your beneficiaries when filling out designations. This is especially important if your family contains a lot of juniors and seniors, as you must get the entire name correct to ensure a smooth process. You must also ensure that you use a person’s legal married name, as opposed to their maiden name.
Keep age in mind
Beneficiary selection is also essential, particularly when it comes to minors. You cannot leave money directly to minors, as they will require a conservator to manage the money until they reach the legal age. In this case, it is best to leave assets to minors in a trust, which will pay out their inheritance once they reach a certain age.
Review beneficiary designations
Once you have chosen beneficiaries and listed them on your accounts, you must revisit your selections every few years or so. Keep in mind that the information included in these documents will supersede information in your will. You may need to update your designations after major life occurrences, such as divorce or the birth of a new child. Regular reviews ensure you’re still satisfied with your decisions.