Estate planning involves just that…planning. When new client’s come in to our office, we collect and review all of their statements and paperwork. One of the biggest “blunders” we see is outdated beneficiaries on an IRA account.
In today’s fast moving world, we sometimes forget to update information that we entered onto a form after a period of time. If you have had any changes in your life with regard to family, business or estate matters, the lack of updating your beneficiary designation on your IRA is potentially catastrophic. Why? Let’s see…
You were never married before, and the happy day comes. You’ve been diligently putting money into your IRA or pension plan, and since you were single, you most probably put down your parents or siblings as the beneficiary. If you were to leave this fine earth early and unexpectedly, you may have created an estate for your parents, but your beloved spouse will get nothing.
With a 50% divorce rate currently quoted in the media, many of you have found love the second time around. Check your beneficiary designation- is your new spouse or is it still your ex? Need I describe what would happen if you died and your former spouse got the inheritance? (I’ll wait until you finish laughing) Now there’s a fate worst than death!
In addition to your IRA and pension fund, check your life insurance and any other insurance policies that create a payout upon death for a beneficiary- make sure they are all up to date, and comport with your current wishes and needs. Leaving loved ones behind is about the worst thing we can think of…leaving them penniless unnecessarily is even worse.
