If you've worked hard, acquired some nice things and saved a bit, you'd probably like to know that someone will benefit from those things after you're gone.
However, it isn't always easy to sort through the intricacies of the way that different funds and assets are handled after someone dies -- and you may be surprised to find out that some of them don't work the way you might anticipate.
Here are a few things that you need to know -- and check -- if you want the right people to get your money when you're gone:
1. Insurance pays to the designated beneficiary.
Your insurance doesn't pay to your estate unless the person designated as your beneficiary (and any backup beneficiary you named) is deceased.
This can be a big problem. For example, if you bought your life insurance when you were married to your first spouse and you're now married to your second, nothing automatically changes. Your first spouse could still be the beneficiary. It's important to keep in mind that designated beneficiaries are under no legal obligation, regardless of your wishes, to turn that money over to the estate.
2. Pension plans also pay to designated beneficiaries.
If your pension allowed survivor benefits, you need to find out who you elected as a beneficiary and backup beneficiary. People often forget to update their 401Ks, for example, as their lives change. If your spouse has already passed on and your oldest child is named the only backup beneficiary -- because he or she was your only child at the time you began investing -- you may be leaving your other children and grandchildren out in the cold when it comes time to inherit.
3. Consider your options when it comes to the house.
If you own a home, consider your options carefully. If one of your children doesn't own a home, why not? Would that child be capable of taking care of a home? Is he or she a poor financial planner? Are there physical or mental issues that need to be considered? There are a number of way to keep your home out of probate, but you need to discuss the plans for your estate carefully with your attorney.
Don't let your plans get quashed by outdated paperwork. Make sure you update all relevant beneficiary information as soon as possible.
Source: First Republic Bank, "Pass on Your Assets Wisely: How to Choose the Right Beneficiaries," Mark Eghrari, accessed Aug. 31, 2017