A regular review of your estate plan is a great way to stay prepared for the future. But more than that, it’s important to review your beneficiaries and to make sure everything is up to date and as you intend it.
Some people, for instance, may have one person named — often a spouse, child, or close family member — across all of their accounts or assets. Parents with multiple children may name each child on a different account or decide that each child receives a certain percentage of an account. There are many ways to handle your accounts and assets.
It’s good to get in the habit of reviewing your beneficiaries on a yearly basis. Or, if you want to remain particularly involved in the future of your estate, you may do it biannually. Either way, you want to make sure everything lines up with your wishes. The fact is that our families, friends, and the people we consider our heirs can change.
For example, your named heirs may get married or divorced. New children may be born into the family. You may even having a falling out with certain people (it happens and it can create challenging situations). In other cases, a beneficiary may pass away before you do. There are many variables to think about, and it’s important to consider these changes as you review your estate plan.
If something changes in your family or life situation but you do not change your beneficiaries to reflect those changes, they may face problems when it comes time for them to take control of their part of your estate. If you don’t make updates to your account and estate plan, a beneficiary may legally be entitled to an IRA, for example, despite having decided this isn’t what you really want from a practical standpoint.
And to that last point, it’s crucial to make sure all names that appear in your will line up with the beneficiaries named to your accounts. It’s possible to instruct an account to be transferred to “person 1” upon death while your estate plan says “person 2” is entitled to the same account. This isn’t necessarily a common occurrence, but it can happen and cause major headaches for all involved.
When in doubt, review your accounts and your estate plan, and make sure everything lines up. It’s one more way to preserve your legacy and to give your family and heirs one less thing to think about when your estate is passed on to them. It’s peace of mind.