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Beneficiary designations: Periodically reviewing is just smart

One wealth manager calls it "a Valentine's Day present to your heirs."

You might simply regard it as peace of mind.

The subject matter is the beneficiaries that are listed on important funds, plans and accounts that often figure centrally into estate planning, with special focus on periodically revisiting those designations to ensure they are still accurate.

And that Valentine's Day reference makes sense, given that financial institutions routinely send out tax-related information in January that lists beneficiaries. It is a well-considered move for many people to follow up their tax returns with a couple extra moments of focus upon their beneficiary designations, making sure they're up to date and still make sense.

The reason why that is important is underscored by noting what can happen if designations -- for any number of reasons -- are no longer valid.

Quick answer: You're dead and your best intentions are defeated by having your money go to a person or institution you never contemplated it going to.

And that is not good estate planning.

Periodically checking in with an experienced estate planning attorney can yield a host of salutary benefits for any prudent person with wealth to be transferred at some future date. Centrally included is that peace of mind noted above that is secured from knowing that the right people are lined up to receive your assets when the time comes for their distribution.

That of course implies a will and, often, other planning documents. It is crucially important, though, that those legal instruments are properly aligned with beneficiary designations in things like company-sponsored retirement plans, savings account, insurance policies and annuities.

If they aren't, the intent of a wealth distributor can be flatly defeated, because the beneficiaries listed will trump anything that is inconsistently stated elsewhere.

And the repercussions of that can be devastating (e.g., your primary beneficiary died and, because you failed to list another or provide for a secondary beneficiary, your asset goes to probate).

A proven estate planning attorney knows the importance of accurate beneficiary designations and can help a client ensure that his or her intentions regarding beneficiaries are correctly set forth and always make sense.

Source: The Wall Street Journal Market Watch, "Don't make the No. 1 estate-planning goof," Harper Willlis, Jan. 23, 2014

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