MAKE SURE YOUR BENEFICIARY DESIGNATIONS REFLECT YOUR WISHES

Beneficiary designations determine who will receive your assets from retirement plans, life insurance policies and, potentially, bank and brokerage accounts, when you die. Even if you've made an estate plan that includes a will or trust, you need to regularly update beneficiary designations because these assets typically don't go through the probate process.

RECOGNIZE SERIOUS RISKS

Over time, your beneficiary designations may become inappropriate or obsolete as a result of changes in life circumstances, estate planning goals or tax law.

Having outdated, inaccurate or incomplete beneficiary designations comes with high risk.

For example, failure to update designations could mean that you inadvertently leave assets to someone you didn't intend to benefit, such as an ex-spouse.

Or, say you fail to name a contingent beneficiary for an asset, the asset will end up in your general estate and may not be distributed as you intended. In addition, certain assets, including retirement accounts, offer some protection against your creditor, which would be lost if they're transferred to your estate.

GOVERNMENT BENEFITS AND TAX CONSEQUENCES

If a loved one depends on Medicaid or other government benefits (For example, a disabled child), naming that person as primary beneficiary of a retirement account or other asset may render him or her ineligible for those benefits. A better approach may be to establish a special needs trust for your loved one and name the trust as beneficiary.

Also, changing tax laws may easily derail your estate plan if you fail to update your plan accordingly. 

For further information, contact Kevin at  kevin@kmckernan.com or 718-317-5007