June 28th is Insurance Awareness day, a time to take a look at your insurance coverage and make sure it fits your lifestyle, family and circumstances. We want insurance to be there when we need it, for that to happen, we have to be sure our insurance fits our needs. One step that’s often forgotten: naming and updating your insurance and bank account beneficiaries. Let’s take a look at why that’s so important and how this easy and free task can dramatically improve your estate planning and protect your family.
Old Policies, Old Beneficiaries
Perhaps you took out a life insurance policy when you were just starting out, before you got married and had kids. Any life insurance policy will require you to list a beneficiary – who gets the money if you pass away. You listed someone close to you – a parent or a sibling – and put that policy away in a drawer or your filing cabinet.
Ten years later, you’re married and have two children. If something were to happen to you, that money would still go to whoever you have listed as a beneficiary, no matter how your life has changed or who you wrote down. Did you list a spouse and then get a divorce? It might be very frustrating for your new spouse to learn that the money will still go to your ex, no matter the change in your marital status.
Keeping your beneficiaries updated is an important part of having a life insurance policy. Your policy isn’t any good if it doesn’t benefit the people you hope it will. Most accounts allow you to update your beneficiaries online or through a simple form. Learn more about how to change your life insurance beneficiary.
Inaccessible Bank Accounts
You may not realize that your bank accounts allow you to name a beneficiary who would be able to claim any money in the account on your death, without going through the court system. It’s called a Payable on Death account, and it’s as easy as filling out a form.
If you die without naming a beneficiary, your family can’t access the money, and going through the legal system can cost them more than what you have in the account if it is a small amount. Texas Legal attorney Tom O’Leary says he gets many calls from potential clients, hoping to recover money from a relative’s account, finding out that the legal fees would be more than the asset itself.
“I can’t tell you how many times you have somebody coming into the office. Their uncle died and he really didn’t have a lot of assets, but he had $3500 in a bank account,” says O’Leary. “I ask the family if they are named on the account, and when the answer is no, I explain that they’re going to spend $3500 in legal fees to get that $3500.”
Filling out this form for all the accounts you have is a simple way to streamline and simplify your estate planning, whether you have a will or not.
Organize Your Personal Information
A personal information organizer is a document that gives your family all the information they would need if something happened to you – location of documents, account numbers, important people, etc. If you don’t have one of these already, Texas Legal offers a free personal information organizer download that you can print out and fill out for your family.
Consider a Legal Plan
As the old saying goes, the only thing that’s certain is death and taxes. A legal plan can’t help you with your taxes, but it can help you with preparing for the inevitable and protecting your family. If you’re taking a look at your insurance coverage, consider how a legal plan might compliment your other kinds of insurance. Legal insurance allows you to pay a small premium each month – as low as $10 a month – and access a lawyer when you have a legal issue. Texas Legal’s plans all include estate planning, allowing you to you create a will or trust and update it yearly, for free.