Your will is one of the most important estate planning documents because it explains how you want your estate distributed after you die. However, there are a few other things you should keep in mind when planning your estate, one of them being your beneficiary designations.
What are beneficiary designations?
In estate planning, a beneficiary is someone who will receive assets from your estate after you die. Beneficiary designations are the legal documents that specify who your beneficiaries are. There are many different types of assets that can have beneficiary designations, including retirement accounts, life insurance policies, and annuities.
It’s essential to keep your beneficiary designations up-to-date for two reasons: you want to ensure that your assets go to the people you want getting them, and beneficiary designations take precedence over wills in many cases. This means that even if you have a will that says one thing, the beneficiary designation will override it if it says something different.
It’s important to note that you can typically name more than one beneficiary for each asset, which can be beneficial if you have multiple children. You can also designate what percentage of the asset each beneficiary will receive. For instance, you could declare that your spouse will receive 50% of your retirement account while your children will evenly split the other 50%.
Updating your beneficiary designations
Updating your beneficiary designations is usually pretty simple. It generally involves contacting the company that holds the asset to fill out a new form. It’s a good idea to review your beneficiary designations every few years, or whenever there’s a major life event, like getting married, having a child or getting divorced. You should also keep copies of all your beneficiary designations in a safe place so your loved ones can find them when they’re needed.
Paying attention to your beneficiary designations is a vital part of estate planning. Keep your beneficiary designations up-to-date to ensure your assets go to your preferred recipients.