In your estate planning process, you need to think about items that will transfer through your will in probate and those that pass outside of it. Most people assume that a will covers all of their needs in an estate plan, but it can be a big mistake to believe that. Your will doesn’t incorporate or determine the transfer of every asset you own, since some may be handled by a trust or through beneficiary designation.
Beneficiary designation is a term used to refer to assets that typically transfer outside of the probate process. The two most common examples of this are retirement accounts and life insurance policies. Your life insurance policy and retirement account company will review the beneficiary designations you have on file if something happens to you.
Regardless of what is stated in your will, your beneficiary designations dictate how your assets will be transferred. This means that if it’s been some time since you updated your beneficiaries, this could cause problems for your chosen heirs. For example, if the person named as a beneficiary in your life insurance policy has passed away and no contingent or backup beneficiary were named, this may mean that your life insurance policy proceeds go into probate. Furthermore, if you’ve recently gotten divorced and have failed to update your estate plan and beneficiary designations accordingly, your ex-spouse may legally be entitled to proceeds from your life insurance policy.
A regular review of your estate plan is one of the only ways to minimize these problems and to ensure that your estate plan addresses the most important concerns for your next steps. Schedule a time to meet with an estate planning lawyer in Pasadena.