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Naming beneficiaries sometimes a missed part of estate planning

On Behalf of | Dec 22, 2020 | Estate Planning

People in California may believe a will is sufficient for leaving assets to desired beneficiaries. While a will is certainly an important piece of the puzzle, there are other parts of estate planning that are equally as necessary. One of those matters is ensuring that owners of various accounts have properly designated beneficiaries of those accounts. Failing to do so could raise questions among heirs once an estate owner has passed on that may be difficult, time-consuming and costly to answer.

The types of accounts that normally name a beneficiary include retirement accounts, life insurance policies, other accounts that have a “transfer on death” designation as well as others. When an account owner dies, the assets in the account go to the beneficiary, which can be a simple and straightforward process. The problem comes in usually when an account owner neglects to update the designated beneficiary after a significant life event, such as a divorce. In this case, an ex-spouse could inherit an account, even if a will stipulates otherwise.

The good news is that these designations are normally fairly easy to change. Furthermore, account owners may be able to designate certain percentages to several heirs or charities, depending on their desires. There can even be a primary, secondary and tertiary beneficiary which is helpful if one of the beneficiaries has died before the account owner. The most important thing is for account owners to ensure that these beneficiaries and any order of succession is updated in accordance with their wishes.

Even though this initial step of estate planning is vital, updating one’s beneficiaries isn’t the only part of the process. Fortunately, an attorney here in California who understands this area of the law can help families create estate plans that contain components necessary for their particular situation. When people have a comprehensive estate plan in place, it can bring peace of mind no matter what the future may hold.


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