Today, many people have very diverse assets. Ever-increasing numbers of people have more and more assets that distribute outside a will or trust. One “side effect” of this is the increased complexity involved in estate planning, and the added level of diligence needed to keep that plan updated. You may have kept up with the major reasons for engaging in an estate plan “check up”, but the triggers for an update may be more numerous than you think.
Recently, MarketWatch released an article warning readers to avoid what that author described as “the No. 1 estate planning goof.” What was that “goof”? Failing to update your beneficiary designations on a regular basis. This warning is well worth heeding, as beneficiary-designation accounts may include a wide swath of financial holdings, including your IRA, life insurance, annuities, mutual funds, brokerage accounts, savings accounts and checking accounts. In Wisconsin, this is especially true as additional assets, which could include your house or other real estate, may have a pay-on-death beneficiary designation on them, as well.
Beneficiary designations may be extremely helpful, allowing you to pass assets without worrying about probate. But an outdated beneficiary designation can be a nightmare, handing over huge chunks of your wealth to ex-spouses, estranged or distant family members or perhaps a relative’s spouse whom you barely know.
The most obvious instances for ensuring that your designations are updated involve life-changing events. These may include births, deaths, marriages or divorces. However, as the MarketWatch article notes, there are additional (and less obvious) reasons to make sure you have recently updated your designations. These include events like a job change, because the changes created by rolling over your retirement account may mean you need to fill out new designation forms. Also, if you move your assets from one financial institution to another, or if your institution merges with (or becomes bought out by) another, then you should check on your designations. Your existing designations may not carry over to the new institution.
Finally, you should be aware that changing life circumstances may require more than just new beneficiary designation forms. For example, if the death of a child means that your minor grandchild is now a beneficiary, or if a beneficiary you already designated begins receiving need-based governmental benefits (such as SSI), then you may need to create a trust to hold those assets for the beneficiary, as long as the beneficiary remains eligible for his/her benefits (or until reaching the age of majority, in the case of a minor beneficiary).
Keeping your estate plan up-to-date may seem, on its surface, to be a simple process. However, proper estate plan maintenance requires going deeper than just the surface. To ensure your estate plan remains in optimum working order, talk to an experienced estate planning attorney at Krause Donovan Estate Law Partners, LLC. They can guide you through the entire process, whether that process involves simply regards completing beneficiary designation forms or engaging in more complex trust planning to protect you and your beneficiaries. Contact one of our attorneys today.