February is a great time to pull out your will, insurance policies, and retirement accounts and be sure that the Beneficiaries that you have listed are still correct.
This comes into play if there have been changes in your life, like the birth of a child or grandchild, a death in the family, a divorce, or a remarriage. However, even if things remain the same, it’s still a good idea to review your beneficiaries to be sure they are complete and current.
Also, did you know that the beneficiary forms associated with these accounts generally trump your will and/or Trust? True story: The assets in most pension plans, qualified retirement accounts, and life insurance policies go directly to the people named on the beneficiary forms — even if they are different from the people named in your will and/or trust— and are not subject to probate.
Fortunately, it’s really easy to assign or change your account beneficiaries. Unlike a will or a trust, which may have a cost to update, a new beneficiary designation form can easily be filed with the appropriate financial institution or insurance company, usually at no cost.
Something else to consider – Some insurance policies, pension plans, and retirement accounts may not pay death benefits to minors. If you want to leave money to young children, you should designate a guardian or a trust as beneficiary.
The use of trusts involves complex tax rules and regulations. There are expenses associated with the creation of these legal instruments. Consider the counsel of an experienced estate planning professional and your legal and tax advisors before implementing a trust strategy.