When creating estate planning documents such as wills and trusts, you’ll need to set up beneficiary designations. This helps ensure that the people named in your will receive the assets designated to them. It is also important to update these designations as changes occur in your life. Here are some tips on keeping beneficiary designations updated.

Times to Update Beneficiary Designations

• When opening a new account or insurance policy. Certain assets, such as IRAs and retirement accounts, are not necessarily covered by wills or trusts. Without a named beneficiary on these accounts, the assets would have to be sent to the estate’s administrator, which can delay the named beneficiary on your will or trust from receiving the assets. Make it a standard practice to name a beneficiary every time you set up a new account or insurance policy.
• After major life changes. Certain events in your life – divorce, remarriage, birth of a child – might affect your decision about who is named as beneficiary. Review your designated beneficiaries at these times and see if any changes should be made.

Naming a Trust as Beneficiary

Alternatively, rather than naming a person as beneficiary, the grantor can name a trust as a beneficiary, and assets can be passed on based on the language in the trust.

Trusts can be an important part of an overall estate plan, and in many situations are preferable to a will. Assets contained in a trust can, in many cases, avoid the probate process and be passed to a beneficiary upon the grantor’s death. Trusts can also be structured for distributions to be made over time or upon the beneficiary’s achievement of certain milestones.

The estate planning attorneys at TuckerAllen can describe the legal requirements of a trust and assist in its creation.