Most estate assets must first undergo a court-supervised process known as probate before heirs can take possession of them. Two exceptions to this rule are for retirement accounts and life insurance policies. While these usually do not have to be probated, there are exceptions.
Administering one’s estate properly requires a consideration of all assets and how they fit into the larger picture of what an individual leaves behind for their heirs. For questions concerning estate administration in San Mateo County, count on the guidance of Biddle Law.
Retirement Accounts, Life Insurance, and Your Estate Plan
When an individual leaves behind a last will and testament, the probate court has to determine whether the will is valid and make sure that all assets are properly distributed to the designated heirs. However, probate is a potentially time-consuming and expensive process. But not all estate assets must pass through probate, and retirement accounts and life insurance policies are two examples.
Retirement accounts
As a general rule, retirement accounts do not pass through probate as long as the account holder took the time to designate beneficiaries. It is imperative, however, that the holder of the account keep beneficiary information up to date. Marriage, divorce, and the birth and death of a child could require the account holder to revise their beneficiary designations.
Retirement accounts with beneficiary designations usually do not have to be probated before heirs can take possession of account funds. This means that the beneficiary can more readily access the money without the need for court involvement.
Life insurance policies
Life insurance is used to pay for a person’s final expenses such as outstanding debts and funeral and burial costs. When the policyholder dies, beneficiaries in San Mateo County can usually access these funds relatively quickly and without the need for probate. As with retirement accounts, this avoids considerable time and expense.
You should make sure that beneficiary information stays up to date. Policyholders can generally change their designated beneficiaries unless the person is considered an irrevocable beneficiary. In that case, the policyholder would need the beneficiary’s consent before changing.
When Estate Administration Becomes More Complicated
Provided the beneficiary designations for retirement accounts and life insurance policies are correctly done, and any changes are properly made, these assets should pass directly to beneficiaries with no need for probate. But there are cases in which probate might be necessary, meaning that a San Mateo County estate administration attorney will need to assist. These are some examples:
- The account or policy has no named beneficiary: If the retirement account or life insurance policy does not have a designated beneficiary, then the asset will have to undergo probate. It’s easy to forget to name beneficiaries of such accounts, so be sure you don’t overlook this.
- You name your estate as the beneficiary: It’s strongly recommended that you name an individual like your spouse as the beneficiary of your life insurance policy and retirement accounts. Naming an estate will likely require probate.
- You fail to update beneficiaries: As mentioned above, certain life events such as the death of a beneficiary may require you to make updates. Failure to do so could result in the need for probate.
- You did not comply with legal requirements: For example, you may need to obtain spousal consent for certain beneficiary designations. If you do not take this step, then probate may be unavoidable.
Ready to Handle All Aspects of Your San Mateo County Estate Plan
From developing your unique estate plan to helping your beneficiaries administer it, Biddle Law is your trusted law firm. If you have questions about the role that life insurance policies and retirement accounts may play in the legacy that you leave behind, reach out to us today.