California families come in many forms, and blended families are becoming more common as people remarry and have stepchildren. One unintended consequence of being in a blended family is that it can complicate the estate planning process. It’s crucial to update your beneficiary designations whenever your family situation changes, or else you risk leaving assets to family members who you don’t want to have them. Here are some reasons this is so important in situations involving blended families.
Assets and Accounts with Beneficiary Designations
Updating your beneficiary designations starts with knowing what documents or components of your estate plan you must refresh. Some critical things to update whenever your family situation or wishes change include:
Life Insurance Policies – If you’ve remarried or added stepchildren to your family, make sure your beneficiary list reflects your current wishes. Otherwise, a former spouse or other unintended person could receive your life insurance policy payout.
Retirement Accounts (401(k), IRA, etc.) – These accounts pass directly to the named beneficiary, no matter what your will says. It’s essential to keep them current to make sure the right person inherits the funds.
Payable-on-Death (POD) Bank Accounts – POD accounts automatically transfer to the listed beneficiary, so updating them is key after a marriage, divorce, or adding new family members.
Transfer-on-Death (TOD) Investment Accounts – Like POD accounts, TOD assets go straight to the named person, so review your beneficiaries after any changes in your family.
Wills and Trusts – These documents should reflect your current family structure and estate planning goals. Failing to update them can cause confusion or conflict among your heirs after you die.
Pension Plans and Survivor Benefits – If your plan includes survivor benefits, make sure they go to the person you intend, especially if you’ve entered a new marriage or relationship.
Annuities – Annuities often include a designated beneficiary, so make sure yours is current to avoid unwanted outcomes.
What Happens if You Don’t Update Your Beneficiary Designations?
If you don’t update your beneficiary designations after a significant life change – like getting married again or the birth of a stepchild – assets from your estate could go to someone you no longer intend to benefit. For example, if your former spouse is listed as the beneficiary on your life insurance policy, they could receive the full payout instead of your current spouse or children. Even if your will says otherwise, beneficiary designations usually override a will. That’s why keeping them current is vital, especially in blended families.
When Should You Review Your Beneficiary Designations?
You should review (and possibly update) your beneficiary designations after any change to your family or estate planning goals. Some specific situations that warrant a review include:
Marriage or remarriage
Divorce or legal separation
Birth or adoption of a child or stepchild
Death of a beneficiary
Creating or updating a trust
Major financial changes
Changes in your relationship with a beneficiary
Periodic reviews every few years
Contact Our Palm Springs Estate Planning Lawyers for Help
At Heritage Legal, we understand that updating beneficiary designations is critical to maintaining an effective estate plan, especially for blended families. Our experienced team can work closely with you to make sure your beneficiary designations align with your current wishes and family dynamics. Founder and principal attorney H. Christopher Heritage is particularly attuned to the needs of diverse and non-traditional families, including the LGBTQ community, and we strive to make sure all clients receive personalized legal guidance.
Whether you’re revising beneficiary designations or embarking on comprehensive estate planning, Heritage Legal is committed to protecting your legacy and supporting your family’s future. Call now or complete our contact form for a free consultation.