Most Michigan estate planners do not intend for their ex-spouse to inherit money when they pass away. Despite these intentions, mistakes can be made that could result in an ex receiving money after one passes away. While there are state laws to prevent this, some accounts stand outside of these laws and may be vulnerable in these instances. For this reason, it is important to carefully review beneficiary designations on all accounts after parting ways.
What are beneficiary designations?
Beneficiary designations are people named on an account to receive funds within that account when the primary holder passes away. These people are usually named when the account is open. Therefore, it is not uncommon for individuals to still have an ex named on their account if they have neglected to update the designation.
What accounts are most vulnerable?
Pensions are the most vulnerable when it comes to this mistake. This is because the laws preventing exes from receiving property are state-level, but pensions are federally governed. Specifically, the Employee Retirement Income Security Act of 1974 (ERISA) governs pensions. This means that legislation at the state level does not apply in these cases. While pensions are the most vulnerable, any bank account with a designation that contradicts a will can be very problematic in estate administration.
The importance of regular estate plan review
Ultimately, the best way to prevent this or similar pitfalls is to regularly review one’s estate plan, especially with a major life change like the birth of a child, purchase of a home, or divorce. It’s important to remember that this review not only involves looking over one’s will, but also other important paperwork like POAs and beneficiary designations on accounts. A Michigan estate planning attorney can help to clarify all the steps needed to ensure all documents align and an estate plan is complete.