Circumstances That Warrant Changing a Beneficiary

Beneficiaries play integral roles throughout the estate planning process, for without them estate planning wouldn't serve nearly as much purpose. A beneficiary is anyone who gains an advantage or profits from something. In the estate planning world, a beneficiary would stand to receive money or assets from a trust, through the distribution of a will, from bank accounts, life insurance proceeds, retirement accounts and so forth.

A beneficiary is either named in these documents or they have met the stipulations which make them eligible for a distribution which has been specified. For example, in a trust a grandparent who has an infant grandchild can stipulate that the grandchild shall receive his or her inheritance upon turning the age of 21, or after he or she earns a bachelor's degree, or after they produce an heir.

Typically, anyone can be named a beneficiary of a will or a trust or life insurance policy and the person distributing the funds (the benefactor) can put whatever stipulations they want on the distribution of the funds (e.g. the beneficiary must be married).

If you haven't checked your beneficiary designations recently, you may find that the person who you designated your beneficiary on your retirement accounts or in your will is not who you think it should be. This is especially the case if you have divorced, remarried, or had children since you established your beneficiary designations. If you named a charity as your beneficiary twenty years ago, the charity may no longer exist, or you may have divorced the husband or wife that's still on your life insurance policy.

Failing to periodically review your estate plan can have disastrous consequences and cause those closest to you unnecessary heartache. People have a tendency to establish an estate plan and automatically assume that they are done. On the contrary, estate planning is an ongoing process; beneficiary designations don't expire as the years go by. A failure to update your estate plan can not only have your hard-earned assets wind up in the wrong hands, such failure can defeat the purpose of estate planning in the first place. Whenever the following occurs, you may need to change one or more beneficiaries:

  • You get a divorce.
  • You have another child.
  • There is a birth in the family.
  • There is a death in the family.
  • You establish or sell a business.
  • There is a change in a beneficiary's needs; for example, a beneficiary becomes injured or ill.
  • You have a falling out with a child, a parent, or a sibling.

We recommend that you take out your estate planning documents once a year and read them yourself. Take a look at the beneficiaries and ask yourself, "Are these the same beneficiaries that I would name today?" If you have divorced, remarried, or had any new children, it's essential to ensure that your beneficiaries are updated to reflect these changes. As much as it may be nice to file your estate planning documents away, they cannot collect dust over the next twenty, thirty or forty years; they should be reviewed on an annual basis, just to be sure they are current and up-to-date.

To learn more about changing a beneficiary, contact a New Orleans estate planning attorney from Brown Weimer LLC today.

Categories: Estate Planning
Brown Weimer LLC Attorneys and Counselors at Law - New Orleans Probate Attorney
Located at 400 Poydras Street, Suite #1125
New Orleans, LA 70130
Phone: (504) 561-8700

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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