When to Update Your Beneficiaries

As an experienced estate planning lawyer in Folsom, my clients often ask me questions about updating their beneficiaries. It’s essential to review and, if necessary, update your beneficiaries periodically, especially when significant life events occur. Here are some common situations that might prompt you to update your beneficiaries:

1. Life Events:
   • Marriage or divorce: A change in marital status often requires updating beneficiaries.
   • Birth or adoption of a child: You may want to add new family members as beneficiaries.
   • Death of a beneficiary: If a beneficiary predeceases you, it’s crucial to update the designation.
2. Changes in Relationships:
   • Changes in relationships with family or friends may impact your choice of beneficiaries. For example, if you become estranged from a family member, you might want to update your beneficiaries accordingly.
3. Financial Changes:
   • Significant changes in your financial situation, such as a windfall, inheritance, or a change in assets, may warrant a review of your beneficiaries.
4. Job Changes:
   • Changes in employment, especially if your benefits package includes life insurance or retirement plans, may require updating beneficiary information.
5. Retirement:
   • When you retire, you may need to adjust beneficiaries on retirement accounts or pensions.
6. Estate Planning Changes:
   • If you create a trust or update your will, you should ensure that your beneficiary designations align with these changes.
7. Beneficiary’s Life Changes:
   • If a named beneficiary goes through significant life changes, such as marriage, divorce, or financial difficulties, you may want to reassess your choices.
8. Tax Considerations:
   • Changes in tax laws or your understanding of the tax implications of your beneficiary designations may prompt updates.
9. Review Periodically:
   • Even in the absence of major life changes, it’s a good practice to review your beneficiaries periodically to ensure that your choices still reflect your wishes.
10. Communication Breakdown:
    • If you have not communicated with your beneficiaries in a long time, it might be wise to verify their current contact information and whether they are still suitable choices.
11. Legal or Financial Advice:
    • If you receive legal or financial advice that suggests a change in your beneficiary designations is advisable, take that guidance seriously.

It’s important to note that certain accounts, such as life insurance policies, retirement accounts, and payable-on-death (POD) or transfer-on-death (TOD) accounts, pass outside of probate, and the beneficiary designations on these accounts take precedence over your will or living trust. Failing to update beneficiaries in these cases can lead to unintended consequences, especially when the will or living trust contradicts the beneficiary designations. 

Conclusion

Regularly reviewing and updating your beneficiaries ensures that your assets are distributed according to your current wishes and helps prevent potential conflicts or complications during the estate settlement process. It is recommended to seek the counsel of an experienced Folsom estate planning lawyer to help guide you when selecting and updating beneficiaries.  If you have any other questions about when to update your beneficiaries, contact Thapar Law at 916-579-0605 or send us a message.