Tips From the Experts

Local experts share timely tips and information about philanthropic giving and how you can benefit.*


The 5 Biggest IRA and 401(k) Beneficiary Mistakes

Just keeping up with life's day-to-day demands can be difficult enough and thinking about your designated beneficiaries isn't on everyone's favorite-things-to-do list. But the last thing you want to happen after spending a lifetime accumulating assets is for your estate to get tied up in court appeals and the probate process.

Take just a couple of minutes to brush up on what you need to do now to make sure that those you care for, whether family members or charitable organizations you support, benefit from your wishes after you're gone. 

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When To Review Your Will

In general, it’s a good idea to review your estate plan every year to make sure that your will matches your current wishes.  When there is a change in your life or your family, you may need to change your  estate plans.  Here are some of the top reasons for revising a will:
- Birth of a child, grandchild or person you plan to include in your will or estate plan (an heir)
- Marriage or divorce – you or an heir
- Death, illness, or disability of a spouse or family member
- Start, close, or change family business 
- Retirement or plan to retire within 5 years
- Change in your finances
- Loss of job
- Move to a new state
Remember to review the beneficiaries of your retirement plans (pension, IRA, 401k, etc.) and life insurance each time you revise your will.  Good Shepherd encourages you to consult a qualified estate planning attorney.

5 Reasons You Need a Will

It’s estimated that 60% of Americans don’t have a will.  A will provides guidance and answers for your family during a difficult time of loss.  Without a will, the state determines who gets what, with no consideration for your wishes or your family’s needs.

Meeting with an attorney is the best way to make sure your plans are carried out according to your intentions, particularly if there are special family circumstances.  The planning process is usually easier and less expensive than you might think, especially when you consider the cost of not having a will!

1. You have children younger than 18.
A will allows you to choose a guardian to care for your children and someone to manage their money until they are older. 

2. You own property (car, house, jewelry) or have bank accounts.
A will clearly states who will receive your possessions and other assets. 

3. You are unmarried, widowed, divorced, or remarried.
A will determines who your heirs are, and is particularly important when there are children from a previous marriage or you don’t have a spouse.

4. Your spouse or child has a disability.
Careful estate planning can help preserve a disabled family member’s eligibility for benefits. 

5. You plan to include a gift for a charity in your will.
A will clearly states your wishes and provides instructions on how your charitable gift is to be used by the receiving organization.

Frequently Asked Questions about Wills. 


Beneficiary Designations Trump A Will

When people think of “estate planning” they often associate it with writing a will.  Having a will is an integral part of a good estate plan, but there are other important documents to also consider.  Often overlooked is the beneficiary designation form for life insurance policies and retirement plans.  Reviewing these documents regularly and keeping the information consistent with your overall plan is just as important as revising your will when there is a change in your life or family.  This is especially true if the majority of your investments are in a retirement plan (such as a 401(k), IRA or pension), or you intend to leave an inheritance with life insurance.

Life insurance proceeds are distributed according to the beneficiaries you listed when you purchased the policy.  Retirement plan funds are distributed according to the beneficiaries you listed when you enrolled or opened the account.  Your will does not control these distributions.  If your life insurance policies and retirement plans began many years ago, the beneficiaries you named at the time may not reflect your current wishes or could be inconsistent with your will or trust.  If most of your assets are held in retirement plans, or if you own a life insurance policy, the majority of your estate might not be distributed to people and organizations you care about the most.

The next time you review your will, verify the beneficiaries named on each of your life insurance policies and retirement plans.  To change a beneficiary, request a change of beneficiary form from your plan administrator or life insurance agent.  These forms are sometimes available online.  Prior to submitting the completed form, review the information with your attorney, especially if you plan to make any changes.  Make it a practice to review your life insurance policies and retirement plans as part of your overall estate plan.  Do it each time you revise your will or trust.

Please contact us for more information.


* This information was compiled by staff in Good Shepherd's Development Department with the assistance of R. Nicholas Nanovic, Esq. of Norris, McLaughlin & Marcus, P.A.  It is not intended as tax, legal, financial, or other professional advice.


Related Topics:

- 25 Estate Documents You Need to Put in One Place

- Advantages of Giving from Your Retirement Plan

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