Estate planning is likely not the first thing on your to-do list after a major life change occurs. However, big events like a marriage, birth, divorce or death are often good reminders to review your beneficiary designations named in your life insurance policies and ensure they are up to date with your current wishes.
What Are Beneficiaries?
Before you can review who your beneficiaries are, you need to know what they are. Beneficiaries are people or entities you name in a life insurance policy who will receive the benefits of the policy when you pass away.
Who Are Your Beneficiaries?
If you ask yourself this question and cannot find an answer, then you need to review your beneficiary designations. By not knowing who your beneficiaries are, you are putting your benefits at risk of being handed to the wrong person.
When To Review Your Beneficiaries
While it is easy to get swept up in the sadness that can follow life-changing events like divorce or death, it is also increasingly important to take the time to review your beneficiary designations.
Though many states have laws to protect divorcees, neglecting to review your beneficiary designations following a divorce, could result in your benefits ending up in the hands of the wrong person. If your designated beneficiary is no longer living when you pass, and you have no contingent beneficiary listed, your benefits could end up going toward existing debt, your estate, or even the deceased beneficiary’s estate. None of which was your intention.
Life-changing events are not always sad. It can be just as easy to get swept up in the excitement of events like marriage, birth or adoption. These events are another important opportunity to review your beneficiaries. You may want to name your new spouse or children as beneficiaries. Expanding a family is exciting, but if beneficiary designations aren’t updated in the process, unnecessary drama can ensue. For example, if your first child is named, but the others aren’t, conflict can boil.
Unsure Of Where To Start?
Estate planning is scary business, and changing beneficiaries can be daunting, especially with the paperwork that is involved. Though this article is focused on life insurance, the principles also apply to any other account that has named beneficiaries. When making these decisions, it is always best to consult an attorney.
Contact a Virginia Estate Planning Attorney
Principals Jason Smolen and Daniel Ruttenberg are estate planning prepared to help you navigate this process. Contact Jason Smolen at jdsmolen@smolenplevy.com and Daniel Ruttenberg at dhruttenberg@smolenplevy.com.
About the Authors
Jason Smolen
Jason Smolen is a founding principal of SmolenPlevy. Smolen’s knowledge of complex estate and business issues has drawn the attention of ABC News, USA Today, E! Online, Realty Times and the Bank of America Small Business Online Community. Mr. Smolen is a graduate of the City College of the City University of New York and the George Mason University School of Law. Smolen also serves as a board member of a local citizens association and recently co-authored an article titled Why You Should Think About Spousal Limited Access Trusts (SLATS).
Daniel H. Ruttenberg
Daniel H. Ruttenberg, JD, CPA, LLM is a principal with the firm. Mr. Ruttenberg received his Bachelor of Science degree with a double major in Accounting and Finance from the University of Maryland. He earned his Juris Doctor with Honors from George Mason University School of Law and his Master of Laws in Taxation with Distinction from Georgetown University Law Center. Mr. Ruttenberg also served as the Director of the Fairfax Bar Association (FBA) for seven years. During this period, he was also elected president – the youngest in FBA history and served as a member of the Board of Directors for the Fairfax Law Foundation.
