You need to make sure your beneficiary designations coordinate with your estate plan so that your plan actually happens.
But, doesn’t a will dictate where everything goes? No. It’s not that easy. There are two kinds of assets, assets are stuck – that’s what a will deals with – and assets that are not. Beneficiary designations set up a transfer without a court process and get the asset to a beneficiary as quickly as possible.
The most common example is a life insurance. When you purchase a policy, the agent wants to know who the company should write the check out to when you die. Retirement accounts and other financial instruments also usually have beneficiary designations. In Season 3, Episode 5 of the podcast, I take a deeper look at beneficiary designations.
Automatic transfers, like beneficiary designations, also mean that your estate plan isn’t simply your documents. Like I said. You need to coordinate your assets, like beneficiary designations, with your plan… so that your plan actually happens. If you don’t, you’ll have a mess on your hands.
This often comes up after a divorce if documents are updated, but the financial organization is not. Your will might be clear that your ex doesn’t get anything, but if your insurance policy or retirement account still lists them as a beneficiary, that’s a mess.
Financial organization, knowing what you have, where it will go will when you die and how it will get there, it an important part of leaving a manageable to-do list that often gets missed.
How can you keep organized? I made a fillable asset checklist pdf, to help you keep track of it. Get a free checklist when you sign up for the Newsletter.