The Importance of Updating Your Outdated Beneficiary Designations

Turning in designated beneficiary forms can avoid a lot ofunneeded estate administration drama. On the other hand, not doing so can leadto serious consequences. Recently, Morning Star  Advisor published a couple of horrorstories for people who did not update their beneficiary forms. In one case aman died and his ex wife was given his pension and life insurance proceeds. Hischildren from an earlier marriage received nothing because he did not updatehis designated beneficiary forms. The court in that case held that the formspreempted state law that would have disinherited the ex wife.

 In another case, an ex wife received almost $400,000 fromher ex husbands company savings despite the fact that she had specificallywaived any interest in the plan in the divorce decree. Divorce is a commonsituation where designated beneficiary form can be a problem, but it is not theonly situation. It can also be a problem when circumstances change yourintended heirs. People should not depend on their will to supersede beneficiaryforms because generally the name on the most recent form will receive the moneydespite a conflicting statement in a will.

See Bill Bischoff, Don’t Make this Common Estate Planning Error, Morningstar Advisor, Sep. 17, 2013.

Special thanks toJim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringingthis article to my attention.