Many people in Iowa may have assets in their estate that are passed by beneficiary designation. When people start a retirement account or purchase a life insurance policy, they also fill out a beneficiary designation form that says who they want those assets to go to after their death. Unfortunately, it can be easy to forget about this form.
As people move from one workplace to the other, they may leave a 401(k) or other accounts with the previous employer. This was the case for one man who, in reviewing his documents, discovered that he had never removed his ex-wife as primary beneficiary on one of his accounts even though his divorce was 15 years earlier. People may make the mistake of assuming that they can rectify any errors with beneficiary designations in a will or a trust, but beneficiary designations override the instructions in these documents.
People should also make sure that they consider what might happen if a beneficiary died. One woman had an IRA with a value of over $1 million that listed her three children as beneficiaries. However, one of them died before she did. She had not specified whether that person’s children should receive their share, and her two surviving children split it, leading to family litigation. Regularly reviewing the estate planning may help prevent similar issues.
Other documents besides beneficiary designations also need review, including the will, any trusts and powers of attorney. An executor or another individual who played a role in the estate plan might have died, or the person’s relationship with some individuals may have changed, necessitating a change in the plan as well. Changes in the law may mean that some strategies need to be rethought. An attorney may help a person periodically conduct this review and make necessary changes.