Furthermore, your retirement plans and insurance policy may not just require a single beneficiary — you may also be asked to name a contingent beneficiary, to whom assets will pass if the primary beneficiary has already died. As you can imagine, the situation could become quite muddled if stepchildren are involved in a remarriage.
To avoid these potential problems, make sure to review the beneficiary designations on all of your accounts at some point — and especially after a significant change in your family situation. If you see something that is outdated or incorrect, contact your retirement account administrator — or your insurance representative, in the case of life insurance — to request a change-of-beneficiary form.
And if you really want to be on the safe side, you may want to enlist a legal professional to help you with this review to make sure the beneficiary designations reflect your current family situation and are consistent with what’s in your estate plans.
In fact, if you’re already working with an experienced estate planning attorney — and you should — you might also pick up some other suggestions for dealing with beneficiaries. Just to name one, it’s generally not a good idea to name minor children as beneficiaries. Because children can’t control the assets until they become adults, a court would likely have to name a guardian — one that you might not have wanted. Instead, you could either name your own custodian to manage the assets designated to the minor or establish a trust for the benefit of the minor, which can distribute the money in several disbursements over a period of years — which is often a good move, since young adults aren’t always the best at managing large lump sums.