Ohio residents who need to make an estate plan should be mindful of whether they have accounts with beneficiary designations. This may include insurance policies, savings accounts and retirement accounts. Sometimes, people fill out beneficiary paperwork once and forget about it. Since beneficiary designations override wills, however, the result can be assets going to the wrong people.
One example may be an IRA that has a spouse listed as a beneficiary. If that spouse has died and no secondary beneficiary has been named, then the assets become part of the estate. If children had been named as secondary beneficiaries, they would have been able to receive distributions on the account throughout their lives.
It should be noted that there are advantages to using beneficiary designations. These assets do not have to go through probate, which can be costly and time-consuming in some cases. With beneficiary designations, assets will pass more efficiently and directly to heirs. However, it is important to coordinate these designations as part of an overall estate plan and review designations regularly and after any major family changes such as divorce or birth.
Failing to do this regular review could mean that a former spouse ends up with the bulk of an estate’s assets or that children born after the designations receive nothing. A person might also want to work with an attorney to prepare an estate plan because there may be a number of other options available besides wills and beneficiary designations. Some people may not realize how flexible and useful trusts can be.