With over $12 trillion put away in IRAs and retirement accounts, many Americans have not put much thought into what will happen to these accounts should something happen to them. And, in truth, what happens to your retirement in those unfortunate situations may be not at all what you would expect. Do you know who the beneficiary is on your account? Can you change the beneficiary by naming someone in your will? Read more to find out the answers you need.
Many people believe that if they name people in their will as heirs, then they will be the beneficiaries of their retirement accounts. However, the beneficiary of a retirement account is based on the state and federal laws and the beneficiary designation form that the individual filled out when the account was created– usually many years in the past. Yet, many people are flying through the forms when they get a new job and just write down the first person that comes to mind as the beneficiary, with the thought that they can change it later. Then, as your life continues down its course (children, marriage, etc.) you may want to change your beneficiary of these accounts, right?
Even updating your will after a marriage, divorce, or child’s birth, these changes may not be effective on the beneficiary of your IRA account or 401 (k) due to state and federal laws. The ERISA makes it so that when two people are married, then the 401 (k) will go to the individual’s spouse– even if someone else is on the beneficiary form! However, there are exceptions to this if the spouse has signed a notorized waver.
As many of you know, life insurance is meant to substitute a person’s income if they pass away before they stop working. That is why many people purchase “term” life insurance, meaning that the insurance policy lasts until that person retires or reaches retirement age., Yet, life insurance in an estate plan is a great idea as it can offer a variety of opportunities. For example, your heirs will recieve your life insurance policy so that they will not have to sell off the assets or your estate is hard to divide and you want to leave your heirs equal inheritances. You could also use this policy to set asside a college account for your heirs and future generations.
Your personal property, like your serving dishes or items with sentimental value, are things that you should know who you want to get what item, in the case that something unexpected happened to you. To do this, you will need to complete a personal property memorandum. This memorandum will mostly cover things like artwork, jewlery, and furniture items.
No one ever plans on their life ending early– but the truth of the matter is that it happens. With this in mind, it is important that all of your assets are going to go where you want them to following your unepected demise. Please, come talk to an attorney at The Law Corner today for a consultation visit. In this visit you can get all of the information you need to decide if you need and which type of estate plan best suits your needs. Give us a call at 919-424-8319.