Commonly, it is believed that one’s Last Will and Testament is the primary document providing for allocation of assets when one dies. However, if a beneficiary designation for a retirement plan, IRA, life insurance policy, investment account or similar account does not agree with the Will, beneficiary designations will generally pass the subject assets to those persons listed as the beneficiary(ies) despite what your Will may say. In order to ensure your wishes are upheld after your death and to prevent legal or administrative hassles for your heirs, it is essential to bring all beneficiary designations into agreement with your Will and other estate planning documents. Here is what you should know.

MAINTAINING BENEFICIARY DESIGNATIONS

Beneficiary designations should be completed upon establishing a retirement account, life insurance policy, annuity, and/or other similar accounts to allocate the account assets to one’s heirs. These beneficiary designations can usually be changed at any time. However, account holders often neglect to keep these beneficiary designations up to date and may think their Wills supersede the beneficiary designations. This can be costly for intended heirs, depending on state law.

Ideally, account holders and their legal counsel should consider beneficiary designations during regular estate planning meetings. At a minimum, beneficiary designations should be carefully reviewed:

  • upon establishment of the retirement plan, insurance policy, annuity, and other similar accounts;
  • after any major life event that might impact a planned inheritance, including marriage, divorce, births, and deaths; and
  • if the plan administrator makes any changes to the product or plan policies that might affect your beneficiary designation.
ACCURACY, CONSISTENCY, AND SAFEKEEPING 

Do not rely on plan administrators to accurately complete beneficiary designation forms or keep them up to date, and do not submit these important documents without reviewing them thoroughly. To ensure accuracy and that proper steps are taken, it is best to complete the forms with your attorney, who will look for any inconsistencies between beneficiary designation statements and your estate planning objectives and documents. Your attorney will also verify that the beneficiary designation statements conform to beneficiary designation requirements provided by the plan administrators and state law.

Once the beneficiary designation statements have been reviewed, submit them to the specific plan administrators, and place copies of each beneficiary designation form in safekeeping with your other important files. If you choose not to coordinate with your attorney in completing the beneficiary designation forms, provide your estate planning professionals with copies of these beneficiary designation documents.

REACH OUT TO OUR ESTATE PLANNING ATTORNEYS law firm lobby

Because these beneficiary designation forms are relatively simple, it is easy to overlook their importance and how they align with the bigger picture of your estate plan. Due to the weight the beneficiary designations carry, it is essential that they are accurate and consistent. Estate planning experts at Kennedy & Ruhsam Law Offices, P.A. have helped Minnesotans for decades. With convenient locations in Eagan and Cannon Falls, we are ready to give you practical, efficient advice and peace of mind. Contact us at 651-262-2080 or clerk@mpkennedylaw.com.