Perhaps you prepared your last will and testament years ago and have not looked at it since.
Time has passed, and changes have no doubt occurred in your life that might affect your original beneficiary designations. Could updates be in order?
Lack of contingent beneficiaries
If you only established a primary beneficiary for your retirement account or life insurance policy, what if that person predeceases you? The asset will have to go through the probate process when you die. Furthermore, in the case of a retirement account, there could be some unwanted tax consequences. Review your accounts and policies and make sure you name contingent beneficiaries.
A minor child as direct beneficiary
Within your will, you may have set up a testamentary trust giving your child control over an inheritance upon reaching a certain age. However, you then named your minor child as the direct beneficiary of your life insurance policy. Consequently, your child will receive those proceeds when he or she becomes 18, an age at which most young adults are not yet financially responsible. Instead, you can name your estate as beneficiary. That way, the insurance policy will have to pass through probate, after which the proceeds will go into the testamentary trust you established for the benefit of your child.
Problems for a special needs beneficiary
You may have a loved one with special needs who receives, and depends on, a government benefit such as Supplemental Security Income. In your original will, you may have named him or her as a direct beneficiary. However, this could disqualify your loved one from receiving government benefits. You can avoid this problem by forming a special needs trust within your will to serve as a receptacle for the funds. Your loved one will benefit without jeopardizing his or her ability to receive financial assistance from the government.
No time like the present
The good news is that you actually have a will; many people die without one. Now would be a good time to revisit yours and make any necessary updates to ensure that your beneficiary designations have changed with the times.
