One of the most significant errors made with estate plans is failing to update the plan after major life changes. Many believe that once a plan is in place, they do not need to do more, but this can lead to problems that may cause complications for loved ones down the road. Updating beneficiary designations is a crucial part of the estate planning process, especially after major life changes like a divorce or remarriage.
Some in Louisiana avoid estate planning in general or updating their plans because it seems unnecessary. In reality, it’s possible to get a significant amount of legal and financial protection simply by making sure designations are up to date. This is an easy way to maintain control over assets and ensure that they end up with the right person. For example, it is important to change beneficiaries on life insurance accounts after a divorce. Otherwise, an ex-spouse could end up with the payout.
There are certain types of accounts that require beneficiary designations. These include life insurance accounts, 401(k)s, traditional IRAs, Roth IRAs, pension plans, annuity accounts and certain types of retirement accounts. A careful review of an entire estate plan and financial accounts can reveal if any changes are necessary in a specific situation.
When starting the estate planning process or considering updating estate plans, it is helpful to work with a knowledgeable Louisiana attorney. An assessment of the needs and objectives of the individual can identify the specific estate planning tools that can be useful. An updated and thoughtful estate plan can help one have confidence regarding future financial security.