Unintended Consequences: Don’t Overlook Beneficiary Designations when Preparing Estate Plan
The focus of many individuals when designing and implementing estate planning documents rests on the Will or Trust, Durable General Power of Attorney or advance health care directives. At times, individuals overlook assets that may pass in other ways, such as through beneficiary designation, pay on death transfer, or joint ownership with rights of survivorship. Individuals should be diligent to ensure such non-probate transfers comport with the terms of the estate plan.
Oftentimes, a sizable percentage of the total estate is comprised of retirement plans and life insurance, both of which pass by beneficiary designation outside the terms of the Will or Trust. Integrated estate plans require careful consideration of the beneficiaries of items passing through non-probate transfers. Failure to take these matters into account can result in unintended individuals receiving assets or individuals receiving assets in an unintended manner. Beneficiary designations should be routinely reviewed and updated to confirm that the correct beneficiaries are named.