The beneficiaries you name in your will to receive your assets after your death or to care for your minor children are more than likely very close to you or even members of your own family. While the death of a beneficiary is a sad time in a family’s life, it is also a time that you have to take an introspective look at your own estate plan.
That is the time that you need to update your will kuvubf=g and any beneficiary documents. Most investment companies that manage your Roth IRAs, 401ks, and other investment accounts allow you to name a beneficiary in order for those assets to skip probate court and be distributed directly according to your will.
The same thing is true for your life insurance policies if you have a beneficiary form on file with your life insurance companies. Anytime that you have a significant event in your families such as the birth of your child or the death of a named beneficiary, it is time to update your wills, trusts, living trusts, and other estate planning documents.
Dangers Of The Death Of A Beneficiary
If you have not updated your estate plan and still have a named beneficiary when you die, you can create a lot of needless headaches and havoc on your estate. 401k plans and IRAs are governed by state and federal law.
They are required to be distributed upon your death based on your beneficiary designation form and not your will. If you have both documents, your investment’s beneficiary designation form will trump what your will says. The same is true for life insurance policies that are paid out based on who you list on the beneficiary designation form.
If you do not have the correct person listed on the beneficiary designation form when you die, your heirs may fight over the asset through probate court. Probate is a lengthy and expensive proposition. Many people find that the process can take months and lawyers and other fees can eat away 30% or more of the deceased’s assets.
Some types of assets and insurance policies let you name a contingent beneficiary which may help your situation, but you should still update all of your beneficiary designation forms as soon as you learn of a death of a beneficiary. Complete Your Will Online. Receive it INSTANTLY!
Beneficiaries Have to Outlive You
In order for a named beneficiary to receive assets bequeathed to them in your will, they must survive you. Many states have requirements as to the length of time also known as the survivorship period that your heir must outlive you.
Some wills can even stipulate that the survivorship period can be up to 60 days in length. Check with your state laws to determine exactly how long your beneficiary has to outlive you. This can come into play should you die in the same event such as a car accident but at different times.
It is always a good idea to update the documents in your estate plan such as any wills, living trust, other trusts, powers of attorney, and other documents when you learn about the death of a beneficiary. It is important to act right away in order to save your family and your heirs time and headaches should you die without properly named beneficiaries. You do not want to wait to change your will and estate planning documents like so many people wait
Hank, I hope this post doesn’t mean you have lost someone close to you. It’s also a good idea to update beneficiaries when your life changes – marriage, divorce, birth of a child and etc.