The Importance of Reviewing Your Beneficiary Designations

The Importance of Reviewing Your Beneficiary Designations

Question:  I am fifty-eight years-old and have a brother nine years my senior.  My father, who died recently, executed a Will in which he left all of his assets equally to my brother and me.  Before I was born, my father had enrolled in his employer’s retirement plan and designated my brother (then his only child) as the sole beneficiary of that plan.  Here’s my problem: my father never changed the beneficiary designation of his retirement plan to add me.  My brother told me that he will not share the benefits of my father’s retirement plan with me.  That’s terribly unfair because my father, in his Will, clearly desired that my brother and I share his entire estate equally.  Can I can do anything to obtain half of my father’s retirement monies? Very upset, Sarah T.

Answer:  Sarah, although your father’s Will makes it clear that he wanted you and your brother to share equally in his estate, his failure to change the beneficiary designation in his retirement plan to include you, now prevents you from obtaining any of the proceeds from that plan.  Sadly, most people do not understand that the person or persons named as beneficiaries of various assets, including retirement accounts (such as IRAs and 401Ks), life insurance policies, trusts, annuities, jointly-held real property, certain types of bank accounts, and many other similar assets, receive those monies outside of, and regardless of, the language of the Will.  The fact that your father’s Will provides for an even split of his assets between you and your brother has no effect on his beneficiary designations.  So, Sarah, we’re sorry to say that the only way you can obtain your rightful share of your father’s retirement plan is to work it out with your brother—and that seems unlikely under the circumstances.

We urge our clients to check their beneficiary designations on a regular basis. Lifetime changes such as marriage, birth, death, divorce, new financial circumstances, and other factors must be taken into account when you consider, or reconsider, your estate plan.  And you should never create, or review, your estate plan without reviewing your beneficiary designations. We strongly recommend such a review every two to three years.

We are pleased to review estate documents and beneficiary designations as a courtesy to clients  Feel free to call to make an appointment.

You should review your estate documents including your beneficiary designations every three years or whenever a significant change occurs in your life circumstances.