Estate planning is an important step that all Illinois adults should take. It allows you to safeguard your assets and heirs. It’s crucial to pay attention to your beneficiary designations for a variety of reasons.
Marriage, divorce or remarriage
If you get married, divorced or remarry, you need to update your beneficiaries. Marriage could compel you to update your estate planning documents so that you include your spouse so that they can inherit assets in the event of your death. You should do the same if you get a divorce because you may no longer wish your former spouse to receive an inheritance.
Death of a beneficiary
With financial documents such as your IRA, 401(k) or life insurance, it’s common to name a single beneficiary. However, this can be a problem if that person passes away before you. Always add a secondary beneficiary and make sure to update your designations just in case someone you intend to leave money to dies.
Birth of a child
You should always update your beneficiaries when you have a child. Although minor children cannot receive assets, you can include their names on your estate planning documents and hold assets in a trust for them to receive once they reach the age of majority.
Sadly, sometimes, family members have a failing out. You might no longer want to leave an inheritance to a specific person or they might not want to be named as a beneficiary. This is another situation that requires you to pay close attention to your beneficiary designations.
New financial accounts
If you open new financial accounts or a life insurance policy, you should immediately name people as beneficiaries on them. Surprisingly, having several of these types of accounts already can cause a person to forget to take this important step.
These are important reasons to periodically update your beneficiaries. Keeping these things in mind lets you avoid mistakes with your estate plan.