Life Insurance and Retirement Plan Benefits : Are Your Clients Achieving Their Intended Goals?

A substantial part of the assets of many individuals consists of benefits from life insurance and retirement plans (collectively "plan benefits" and "plans," respectively). As an individual's family, friends, and preferred charities change, the intended goals of the individual with respect to the disposition of his or her probate assets and his or her plan benefits may change. Individuals, may not rely on many of the traditional rules of construction for probate asset dispositions to conform their designations to their intended goals, particularly as those goals change. This is particularly the case for benefits from ERISA plans and for plans for federal employees that are not governed by those state rules. Therefore, it is advisable for an individual to: (1) check regularly whether the primary and contingent beneficiary designations of his or her life insurance and retirement plans that are on file reflect his or her current intentions; (2) consider beneficiary designations in the context of the disposition of his or her other assets; (3) review, change or redo all beneficiary designations if his or her marital status changes, his or her children's marital status changes, he, she or they gain or lose non-marital partners, children change, close friends change, or preferred charities change; and (4) consider the extent, if any, it is advisable to make his or her estate or a trust the plan beneficiary in order to provide the desired beneficiaries with the desired benefits, if a plan’s designation terms do not permit the desired choices to be made directly