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Make sure to update your beneficiary designations

This blog has previously discussed that there are ways a New Jersey resident can pass property along to their loved ones without having to draft a will or go through probate. In addition to trusts, people can use vehicles like jointly held real estate, joint bank accounts and other means to pass along property.

One type of property that works like this is a beneficiary account. These accounts include retirement plans and life insurance proceeds. As the name implies, a New Jersey resident can designate a beneficiary, or beneficiaries, with respect to these individual assets.

At the time of the person's death, the property will be paid out to the beneficiary. To give a simple example, if a person died with a life insurance policy that has a $100,000 death benefit, then the beneficiary named in the policy will receive the $100,000 without regard to the contents of the decedent's will or trust. If the beneficiary is not named, the proceeds pass to the person's estate and will be subject to the probate process.

For estate planning purposes, it is important for a New Jersey resident to be certain that they have updated their life insurance policies and retirement plans regularly, and especially after major life changes. A mistake or oversight in this respect could mean that a large chunk of a person's fortune goes to someone other than the intended heir.

Updating beneficiary accounts is an important part of the estate planning process. While doing the paperwork to accomplish this may be relatively straightforward, it may still be helpful to have an attorney walk through one's estate plan to be sure nothing gets missed.

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