Retirement Savings and Estate Plans

With careful planning and review, your retirement savings can provide for your loved ones after your death. By taking a few simple actions, you can ensure that your benefits are awarded to the right person and will protect your family.

Making arrangements for the distribution of your retirement assets after your death is relatively simple. When you start a new job or open a retirement account, you’ll be required to fill out beneficiary forms that designate whom you want to collect on your savings. Unfortunately, it’s fairly easy to forget about these forms as the years pass by, and many people inadvertently leave their retirement assets to an unintended individual, such as a divorced spouse, rather than the current spouse or their children.

You can make sure that your retirement benefits go to the appropriate person by doing the following:

1) Make sure that you review your beneficiary designation forms every 2-5 years or whenever you experience a major life event, such as the death of a spouse, a second marriage, or the birth or adoption of a child.

2) Name contingent beneficiaries so that your family will be provided for if the primary beneficiary pre-deceases you. While you may think that naming your spouse as your primary beneficiary is enough, you can never be too careful with the assets that will help support your family.

3) Do not rely on your will to take care of your retirement assets. A will does not control the disposition of any asset that has a named beneficiary (including life insurance, pensions, trusts, and retirement accounts).  Any named beneficiaries on your retirement account, therefore,  will override any beneficiaries named in your will. If you wish to leave your retirement assets to your estate, you should consider transferring them to a living trust after seeking the advice of an estate planning attorney.

4) If you’ve made the choice to name minor children as beneficiaries, you need to make sure you name a guardian for them and a trustee for their assets. Your retirement funds may be used to provide for the kids if anything happens to you, but minors are not legally allowed to control assets. They will need someone to manage their inheritance for them until they come of age.

Following these simple steps will ensure that your retirement assets work together with your overall estate plan. An estate planning attorney can help guide you through the process of making the proper designations and incorporating your retirement benefits into your estate plan.