One aspect of estate planning that is often forgotten is beneficiary designations for various assets. These assets include individual retirement accounts, life insurance policies, annuities and employer retirement plans. This spring is a wise time to take a look at the designations of beneficiaries while completing estate planning in Texas.
Because of shifting priorities and changing circumstances, people might find that the beneficiaries they have previously named are no longer in line with their wishes or estate plans. For instance, if people have changed jobs, become new parents, or survived their spouses or children, their current beneficiary designations might need updating. Changing beneficiary designations may also be necessary following divorce, although it can be difficult to remember to do this in the heat of an emotional marital dissolution.
Court decrees that end marriages also terminate any provisions of wills; however, these decrees do not immediately revise IRA or employer-sponsored retirement account beneficiary statuses. Some financial institutions do immediately cancel designations of spouses as beneficiaries of IRAs in the event of divorce, but not all of them do this. Also, regarding a profit-sharing account or 401(k), it is required by law that a spouse serve as the primary beneficiary unless this spouse waives this right in writing.
Designating beneficiaries is an essential part of the estate planning process, which may also include drafting a will and setting up a trust depending on one's needs. An applied understanding of the law may help people determine how best to approach their individual estate plans. A well-thought-out estate plan can help a person in Texas to protect his or her important assets while also protecting his or her intended beneficiaries' best interests.
Source: bronxville.dailyvoice.com, "It's 2016: Do You Know Who Your Beneficiaries Are?", John Haffey, Feb. 24, 2016