What happens to my 401(k) when I pass away?

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Ensuring your assets go to your intended beneficiaries is important. Retirement accounts such as 401(k)s or IRAs, annuities, and life insurance policies are controlled by the beneficiary designation you have selected. These types of assets are not controlled by the terms of your will or trust. Your named beneficiaries on these types of assets will receive the account or policy at your death after completing a claim process.

If your 401(k) or other beneficiary driven asset does not have a valid beneficiary designated at your death, the terms of the plan control where the asset goes. Generally, the default in such cases is ‘my estate.’ This means the 401(k) or other asset would have to go through a probate process before the terms of your will or trust would determine who ultimately receives the asset.

It is generally not a good idea to name a minor as the beneficiary for these types of assets. The custodian or administrator will likely require a conservator be named for the minor to receive the account. If you would like to leave an asset to a minor it would be better to have a trust for the minor’s benefit in your estate planning so the trust can be named as the beneficiary of the account or policy.

It is a good idea to review your beneficiary designations every five to ten years or at the occurrence of a major life event such as a marriage, birth of a child, divorce, or death.

You can update your beneficiary designations by contacting the plan administrator or custodian, or your life insurance agent. You can also find beneficiary designation forms on line in many cases.

An experienced estate planning attorney can help you understand your options to coordinate your beneficiary designations and estate planning documents. Contact the Estate Planning attorneys with the Law Offices of Nay & Friedenberg in Portland, Oregon at (503) 245-0894 to set an appointment.

If you would like to learn more about estate planning, click here to receive our FREE Legal/Financial Planning Guide.