Nevada residents who are creating an estate plan may need more than just a will. Assets such as life insurance policies, annuities, individual retirement accounts and transfer-on-death or payable-on-death accounts are passed on to heirs using beneficiary designations.
Beneficiary designations override any contrary provisions in a will. Therefore, it is important that people think of them as part of the estate plan and review them regularly to see if they need to be updated.
However, using a form as simple as a beneficiary designation for an IRA could be an error. It is possible to create a plan for an IRA that can preserve wealth across generations, but something more complex than a beneficiary designation may be needed. Failing to make an effective plan for an IRA could result in more taxes for heirs. Family conflict might also be exacerbated if there is not a clear succession plan. It is possible to create a custom beneficiary form that can have as much detail as a last will and testament. One possibility for an IRA is an IRA trust. An attorney might be able to explain other potential options based on the client’s circumstances.
Keeping beneficiary designations current or creating custom beneficiary forms that deal with contingencies may be particularly important in blended families. One danger with traditional beneficiary designations is that a person may forget to remove a former spouse as the beneficiary. In another scenario, if a form is not updated, children from a current relationship could get left out. Some people who have children from a previous relationship but not in a current one might want to design their estate plans, including their beneficiary designations, so that the children get the inheritance instead of the spouse.