After the death of a spouse, or even after a divorce, it’s important to look at and update, if necessary, any beneficiary designations you may have. Too often we see people lulled into a false sense of security by thinking their Will, which may very well cover what happens when each spouse dies first or second, will take care of everything. While this may be true for things that are passed under the Will, this isn’t true for things that have beneficiary designations, such as IRAs and insurance policies.
In this Estate Planning Minute, Wes Coulson, Illinois Elder Law attorney, discusses another Common Estate Planning Mistake and explains the importance of changing your beneficiary designations after the death of a spouse or a divorce.
Common Estate Planning Mistake #19: Failing to change beneficiary designations after death of spouse
Hi, I’m Wes Coulson and this is your Estate Planning Minute. This is another in our series on Common Estate Planning Mistakes. The one I want to talk about now is the failure that we see quite often to change beneficiary designations after the death of a spouse or after a divorce.
In a lot of cases people have Wills that say: If I die first I leave everything to my spouse and if I’m the one who dies second then I leave everything to my children. And that can lull you into the false sense of security that: Well, we’ve already planned for that and that when one of us dies first, everything is taken care of.
Well, that’s true as to things that pass under a Will, but it’s not true as to things that have beneficiary designations. It’s not uncommon that we see insurance or IRA beneficiary designations that have named a spouse and have not named a successor.
So, when a spouse dies, you need to look at those beneficiary designations. Talk to your IRA plan administrator, talk to the insurance companies, to see it those need to be updated. Probably goes without saying that the same thing applies, maybe with a bit of a different attitude, in the event of a divorce. Thanks.
For more Common Estate Planning Mistakes, visit these articles:
- Common Estate Planning Mistake #8: Failing to address the possibility of a second spouse disinheriting children from a first marriage
- Common Estate Planning Mistake #3: Trying to plan an Estate around specific assets
- Common Estate Planning Mistake #6: Trying to ‘Do it Yourself’
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