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The importance of regularly reviewing your beneficiary designations

On Behalf of | Feb 1, 2023 | Estate Planning

Designating beneficiaries is a crucial part of estate planning in Oklahoma. However, many people overlook this task as insignificant. If you manage your beneficiary designations properly, you will ensure that your assets are distributed according to your wishes after you are gone.

The following issues can arise if you do not keep tabs on your beneficiary designations.

Your will has limitations

Some people mistakenly think the terms dictated in their will supersede all other beneficiary designations.

Life insurance and other assets such as 401(k)s, IRAs and annuities require you to name beneficiaries when you set up and fund the accounts. The beneficiaries are not affected by your will, as these assets do not go through probate.

If, for example, your annuity account has no valid beneficiary because the one you chose has died with no heirs, the assets will revert to your estate as the default beneficiary. That means the annuity will be divided like everything else in your will, even if you intended the account to go only to one beneficiary.

Forgetting about older accounts

Some people have numerous 401(k) and other retirement accounts they set up at previous jobs and neglected to include in their estate planning. The individual may have forgotten about these accounts, never updated the beneficiaries or even remembered they had the money.

Suppose these old retirement accounts have beneficiaries from 10-20 years ago, such as an ex-spouse. In that case, that individual will still get the money upon your death, regardless of any conditions stated in your will.

The same applies if you remarried or had additional children. If all of your accounts do not have updated beneficiaries, your new family will not receive all of your assets as you may have intended.

The best way to manage your beneficiaries

Plan to review your beneficiaries on all your accounts every three to five years. Ensuring they remain current, according to your wishes, is the best way to prevent disputes and assets that go to unintended beneficiaries.

You can change your beneficiaries as often as you would like. Keep copies of any confirmation paperwork related to updating beneficiaries in the same place as your estate planning documents.

Keeping your beneficiaries updated on all your assets can give you peace of mind that your estate will be distributed according to your wishes.