January 28, 2022

When you create a retirement plan, you’ll need to establish beneficiaries for those assets when you pass away. These beneficiary designation forms are handled outside of the rest of your probated estate, meaning that the forms you have on file with your company will be used when you pass away regardless of what it says in your will.

These are used to determine who is entitled to defined contribution retirement plan benefits when the primary participant passes away. Unfortunately, this is often overlooked when the primary planned participant goes through major life changes, such as a divorce or a remarriage. This means that these forms could be outdated.

Typically, the plan sponsor or administrator is responsible for maintaining beneficiary designation forms, however, they may not realize it is their responsibility to keep these up to date when participants enroll electronically.

It is a good idea to put on your own calendar to conduct a thorough review of your estate plan including any beneficiary designations on an annual basis. This way you can make necessary updates as soon as possible and know that you have incorporated any recent changes in your life.

Your retirement plan assets do not pass outside of probate but should still be considered as part of your entire estate plan. Working with a lawyer allows you to go item by item through your estate plan to create a custom strategy for all of your assets. You might wish to equally distribute non-probate assets, for example, among a few family members. Probate assets could wind up tied up in court, so it’s important to think about these issues as you determine who should receive what.