Beneficiaries are an important part of wills and trusts, but beneficiary designations can become a huge problem if they are not updated. Beneficiary designations on your retirement accounts, IRAs, annuities and life insurance policies override wills or trust provisions.
This means that people you don’t intend to inherit your assets could in fact get your money if you were to die.
There are hundreds of stories where husbands and wives get divorced, and forget to change the beneficiary designations on their life insurance or retirement plans. While Montana statutory law provides that such beneficiary designations are revoked upon a decree of dissolution, the insurance company or retirement plan custodian may not know that and when they die, their money may go to their ex-spouse, rather than their kids or their new spouse and the family is left to address the erroneous payment.
Not only do beneficiary designations trump the will, but joint tenancy trumps the will.
Let’s assume you want your house to be passed on to your children after your death, and leave your house in a will or trust to them. If you have a joint tenancy with your spouse or a third party, then the will and trust mean nothing. You can effectively disinherit someone unintentionally.
These examples represent just the start of the complexities involving beneficiary designations. Keeping them updated is a very important component of your estate plan. Let us know if we can help you cut through the noise and create or update your estate plan.