A problem with estate planning is the unintentional omission of heirs. For example, a man dies before revising his will. The result is that his assets go to his ex-wife instead of to his current spouse as he intended. While none of us would allow this to happen, we could have other potential horror stories lurking in our own outdated retirement plans.
Retirement plan beneficiary designations should be reviewed annually and updated when there is a significant life event such as a birth, a death, or a divorce. That single designation is more powerful than you might think because it can override the instructions in your will or trust. Your plan administrator is responsible for maintaining these instructions, but paperwork can get lost and what counts is the physical document itself--not an electronic entry on a computer screen. Keep an updated copy with the other important papers your executor will need.
Naming your beneficiary is another important estate-planning consideration. Naming your estate or trust as beneficiary might not be the best choice, because it can force heirs to take taxable distributions they might otherwise defer. Naming a contingent beneficiary can be another important tool. These issues are best discussed with an attorney.
Though updating legal documents and checking your beneficiary designations can be inconvenient, it is not a large amount of work. In addition, it is one more way to provide for
your intended heirs.
GREGORY CHANDLER, Attorney at Law
e-mail attatlawgc@gmail.com
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