Financial Health Update: Get Your Documents in Order


If you have estate planning documents in place, you probably are aware of the importance of regularly revisiting them and updating them as needed. Most estate planning attorneys recommend you review these documents every couple years, or immediately following major life changes (the birth of a child, a divorce from a spouse, etc.). This includes updating your will, your powers of attorney, your healthcare directives and anything else that may be included in your estate plan.

However, there are other documents aside from those considered part of your estate plan that you might not think about reviewing as frequently. These include retirement plans, life insurance policies and other types of accounts that have beneficiary designations.

Therefore, every time you review your estate planning documents, you should also make it a point to review and update all your beneficiary designations to make sure they are up to date and still reflect your wishes.

Naming a beneficiary

If you need to name a beneficiary or update your beneficiary designation, here are some tips for you to keep in mind:

  • Don’t leave it blank: Never leave your beneficiary designation blank—this forfeits your control over what happens to assets from that account after your death. If you fail to name a beneficiary, the money will be distributed in accordance with state or federal law. Name a beneficiary to maintain control over what happens to your assets.
  • Consider naming a trust: You don’t have to name an individual person to be the beneficiary of your accounts. You can instead opt to establish a trust. This is especially beneficial if you have a large estate that could be subject to the estate tax. Putting a large amount of account proceeds into a trust instead will help those assets bypass probate and ensure they do not count against your estate for estate tax considerations.
  • Update with life changes: As we mentioned previously, one of the circumstances in which people update their estate plan is if they’ve recently had major changes in their life, such as a marriage, divorce, birth of a child or death of a beneficiary. In such cases, it’s important that you update your beneficiary designations, as your wishes may have changed. Just because you get divorced does not mean your spouse can no longer serve as your beneficiary—you have to actively remove them as your beneficiary and name a new one to replace them to ensure they do not get any of your assets.
  • Name secondary beneficiaries: If your chosen beneficiary passes away, you will not have anyone to inherit the assets from your account. This is a reason to regularly review your beneficiary designations, and also a reason to name secondary beneficiaries when applicable. These beneficiaries essentially act as a backup in case of the death of the initial, primary beneficiary.

Interested in learning more about updating your beneficiaries and powers of attorney and why it’s so important? Contact the team at Emory Alliance Credit Union with any questions you have.

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