I cannot emphasize enough to my clients the importance of beneficiary designations. 
A beneficiary designation describes how your assets will be distributed upon your death. It is a form you complete with a financial institution (or your Human Resources department) pertaining to certain assets, for example, when you establish a life insurance policy or create a retirement account.
A beneficiary designation is a substitute to a Last Will and Testament. Therefore, those listed on your beneficiary designation forms, whether individuals, charities or a combination thereof, will inherit. Naming a beneficiary designation allows you to direct distribution and avoid probate with respect to the assets it controls. The directions for asset distribution provided in a Will (or Revocable Trust) will not trump a beneficiary designation.
Signing your estate planning documents is not the end of the process. It is imperative that you update your beneficiary designations so that such assets are distributed according to the plan established in your estate planning documents.
Here are some of the common issues I encounter with my clients and their beneficiary designations:
- They were completed prior to marriage and include parents or siblings (and not the current spouse).
- Minor children are named outright.
- Ex-spouses are still listed.
Beneficiary designations are a critical part of your estate plan. Do not forget to change them, and remember whatever is on the beneficiary designation controls.
Photo: Cast a Line.
