When people in New York plan for the future, some of the most important decisions that they have to make about the distribution of their assets may never be reflected in their will. Even people with updated, accurate wills may need to pay attention to this issue in order to prevent their assets from being distributed in opposition to their goals. Some of a person’s most significant assets, including 401(k) plans, retirement funds, investment accounts and life insurance policies, are distributed after death to a named beneficiary.
These beneficiary designations are considered to have priority over alternate designations in other documents like wills or trusts. It is important to keep them up to date to reflect current goals and plans. In many cases, people named a beneficiary when opening the account but did not update the designation since that time. As a result, many people have life insurance policies or significant investment accounts with a long-divorced former spouse, a deceased parent or an estranged family member listed as a beneficiary.
Changing a designated beneficiary is a relatively simple process. The account holder can contact the insurance agency or plan administrator and request documents to update the named beneficiary. By completing the form and sending it back, people can make sure their beneficiaries reflect their current choices. In many cases, people may name a contingent beneficiary to receive the funds in case the first beneficiary passes away. Without a living listed beneficiary, the proceeds would be distributed based on the original account agreement as well as applicable state law.
Updating named beneficiaries can be an important part of realizing a comprehensive estate plan that addresses all of a person’s assets. An estate planning attorney may help people develop a plan for the future and create key documents to make it a reality.