When engaging in estate planning, you always should take the opportunity to review beneficiary designations on life insurance policies, pensions, individual retirement accounts (IRAs), and 401(k) plans. It is absolutely essential that your beneficiary designations and the provisions of your will are consistent. Otherwise, you can end up having significant assets from your estate distributed in a manner that is not consistent with your intentions.
The bottom line is that the beneficiary designations on your retirement accounts and insurance policies always will trump provisions in your will. Therefore, if you designate your daughter as the beneficiary of your life insurance policy, but your will states that the proceeds from your life insurance policy should go to your son instead, the policy proceeds will go to your daughter. The will provision dealing with the life insurance policy proceeds simply will be disregarded in favor of the beneficiary designation on the policy.
Beneficiary designations are particularly important to review if you have divorced at any point. During your marriage, you probably designated your spouse as beneficiary. However, if you later divorce, you probably will want to remove your spouse as the beneficiary of those assets. If you fail to change the beneficiary designation, you risk having significant assets paid out to your ex-spouse rather than to the person whom you truly wish to receive the assets. You even could end up inadvertently disinheriting a child or other loved one, simply because your beneficiary designations do not match the provisions of your will.
Another problem may exist if your beneficiary designation predeceases you. In that case, the proceeds would pass to your designated contingency beneficiary. If both of the individuals whom you have designated as beneficiaries predecease you, then the proceeds of those accounts likely will become part of your probate estate, for distribution according to your will or Michigan intestacy laws, if you have no will.
Reconciling your estate planning documents and accounts with beneficiary designations is only one aspect of the planning that you are likely to find necessary as you begin to age. If you are in this situation, we have the knowledge and resources to assist you. Call Legacy Law Center today and learn how our Michigan estate planning attorneys can advocate on your behalf. will, estate planning, beneficiary designation, life insurance policy, retirement account