Many people incorrectly believe that estate planning only has to do with creating a will, and as a result forget about the importance of updating the beneficiary designations on financial products. There are serious consequences for not updating the beneficiary information on financial instruments like 401(K) plans or life insurance policies. For example, if a person fails to update their beneficiary designations after a divorce their ex-spouse might be able to disinherit their step-children. This article discusses some of the important events when a person will want to update their beneficiary information. The column also lists the financial products that a person may be able to designate a beneficiary. Staying on top of beneficiary designations can help any future heirs from having to engage in costly legal battles fighting over the estate.
See Jeff Reeves, Your ex could get rich if you don’t update your beneficiaries, USA Today, January 14, 2016.
Special thanks to Jim Hillhouse for bringing this article to my attention.
