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Estate administration hinges on beneficiary designations

When it comes to estate planning, all you really need is a will, right? Not so fast. According to estate administration experts, many assets are not covered by your Michigan will. Those assets include individual retirement accounts, 401(k), pensions, life insurance and other holdings with beneficiary designations. In fact, beneficiary lists can actually override any provisions you include in your will, so it is critical that you update these designations after any major life events.

What type of event qualifies? Consider altering your beneficiary designation after you get married, and especially after you get divorced. More than one case springs to mind in which an ex-spouse received a windfall of cash because someone forgot to fill out a new beneficiary form. In those instances, the most recent spouse can be left without any legal recourse to reclaim the funds that were supposed to be his or hers.

Changing your beneficiary designations is not a gigantic inconvenience. In fact, with modern communications, many firms allow beneficiary changes online! Making sure that your beneficiaries are up-to-date is a critical part of will planning that often gets overlooked -- sometimes with tragic consequences.

Experts say you should also be sure to inform your beneficiaries that they will be receiving your retirement account holdings or life insurance proceeds. This can help your heirs plan and maintain their personal financial goals. A beneficiary designation provides a direct line to your heirs, allowing them to bypass many of the tedious probate processes that plague the poorly prepared. Make sure to manage your estate administration properly so that your heirs get the proper amount upon your death. In some cases, that will just is not enough.

Source: Ahwatukee Foothills News, "Avoid problems by updating beneficiary designations" Joseph Ortiz, Jun. 12, 2014

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