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Wills do not dictate where every asset will end up

Massachusetts residents are urged to review their estate plans periodically to ensure that they continue to meet their goals. However, many people forget to review the beneficiary designations made on retirement accounts and life insurance policies when they are opened. Wills do not dictate where these assets will go upon death.

The beneficiary designation trumps whatever bequest is made in an individual's will. This means that an ex-spouse could receive the benefits from the account even if that was not the intention. Even if the ex-spouse is removed from the account and a new spouse is added, the proceeds may not be used as an individual intended.

For instance, upon death, a new spouse could take the proceeds and put them into another account that does not provide for children from a previous marriage. This can occur despite any conversations between the parties or instructions in a will or trust. Therefore, it is imperative that the beneficiary designation be changed when necessary to correctly reflect the party or parties intended to receive it. It would be advantageous to ensure that the designation is correct, especially if the account is somehow tied to a trust.

If an unintended party receives the proceeds from one of these accounts, it could create unnecessary chaos for family members after a loved one passes away. Massachusetts residents need to be sure that their beneficiary designations line up with any provisions in their wills. If there are any discrepancies, they need to be addressed in order to avoid any issues arising in the future.

Source: wmur.com, "Money Matters: Do you know who your beneficiaries are?", Marc Hebert, July 9, 2015

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