When you start estate planning, you are going to see that so many of your accounts require a beneficiary written into them. Bank accounts, retirement plans, insurance policies, and other stipulations within your last will all require you to write in a beneficiary. That can be a significant ask. When you work with an estate planning attorney, it can be wise to go in with a narrowed-down idea of who you want to assign to these contracts and work with your attorney to choose the right one. However, you can’t expect life never to change, so what happens if you need to change beneficiaries?
Let’s review all that so you can start your estate planning confidently.
What to Consider When Choosing a Beneficiary
Before quickly choosing a beneficiary, there are some things to consider.
Your Relationship
You want to take the time to assess your relationship with the individual you want to name as a beneficiary. If you have different people for different accounts, make sure you are considering how they will properly manage and respect your wishes within that area. Do you think they are capable of that? Do they value you and your choices? Take time to choose someone you trust.
Their Age
Many plans and accounts require beneficiaries to be over the age of 18, but depending on the age you choose could change the stipulations you put in place for the account. Additionally, if you are choosing someone who could be considered older, make sure you have plans in place if something were to happen.
Their Knowledge
If you are assigning a beneficiary to your financial accounts or retirement plans, you want to choose a beneficiary who not only understands these subjects but has been responsible in these areas in their own lives. You may love someone, but it could be wise to choose someone else if they are not the best with money.
Their Interest
When you choose a beneficiary, you don’t want to select someone indifferent to you and your wishes. It is essential to speak to all possible beneficiaries and see if they are interested in the role in the first place to ensure your accounts are well taken care of.
What Mistakes to Avoid When Choosing a Beneficiary
The biggest mistake we see people make when choosing a beneficiary is choosing with their heart. While you want to select people you care about and love, you want to make sure they are truly the best people to handle your assets when you are gone. Additionally, you don’t want to rush the process. Taking your time, speaking with possible beneficiaries, discussing your choices with your attorney, and weighing your options can ensure you are taking the right steps and assigning the best person possible.
Can You Change Your Beneficiary?
Your life is going to change; you’ll have kids, grandchildren, deaths in the family, or a divorce. All of that change means that at least once in your life, your beneficiary choices are going to be affected. So, yes, you can change your beneficiary! Many plans and accounts allow changes of the beneficiary when the right channels are gone through. However, a divorce decree or settlement, irrevocable designation, or transfer of ownership does not allow you to change beneficiaries. If you need to change beneficiaries, utilize your estate planning attorney for help.
What Happens if You Choose Someone Else?
If you do choose to change your beneficiaries, the best course of action is to immediately contact your estate planning attorney before contacting any of your account holders. Your attorney can ensure you are going about the change correctly and choosing a valuable individual for your next beneficiary. Don’t change your beneficiaries on your own; utilize the help and guidance from the experts.
If you have further questions or plan to choose or change beneficiaries, contact the team at Hartmann Law.