In estate planning, beneficiary designations are a key part of the process. These designations say who will receive certain assets, like retirement accounts or life insurance, when you pass away. By keeping them accurate and up to date, you help avoid confusion and make your wishes clear for your loved ones.
What Are Beneficiary Designations?
Beneficiary designations are instructions you give to financial institutions or insurance companies on who should receive your assets after you pass away. These designations are typically made when you open accounts like 401(k)s, IRAs, or purchase a life insurance policy. Instead of these assets being distributed through your will, they are automatically transferred to the designated beneficiaries after you pass away. In Texas, these instructions can even take priority over what is stated in your will, so it’s essential to get them right.
Why Updating Beneficiary Designations Matters
Over time, your life and relationships may change. You might get married, divorced, have children, or experience other shifts in your family dynamic. Any of these changes could mean it’s time to update your beneficiary designations. For instance, if you went through a divorce, failing to update these designations could mean that an ex-spouse ends up receiving funds you intended for your children. Keeping your beneficiary information up to date can help avoid confusion or disputes among your loved ones.
Key Considerations
In Texas, estate planning laws require careful attention to detail regarding beneficiary designations. Texas is a community property state, which means that if you’re married, your spouse may have a legal right to a portion of your assets, even if they aren’t named as a beneficiary. This is something to consider as you review your estate planning documents. To avoid issues, talk to an estate planning attorney who understands Texas laws and can guide you in choosing or updating your beneficiaries.
Common Mistakes to Avoid
One common mistake is assuming that listing a beneficiary in a will is enough. Remember, any asset that has a designated beneficiary will pass directly to that person, no matter what your will says. Also, be cautious about naming minors as direct beneficiaries. Without proper legal safeguards, they may not be able to access the funds until they turn 18, which could mean appointing a guardian to manage those assets.
Contact The Reecer Law Firm
Dena Reecer, founder and owner of the Reecer Law Firm PLLC, is one of a few Texas attorneys who are Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. If you have questions or concerns regarding beneficiary designations or estate planning, please call us at (940) 382-3168 or contact us for more information about how we can help you. Our office is located at 3105 Unicorn Lake Blvd., Denton, TX 76210.
