Changing Beneficiaries in a Will or Living Trust: When and How?
Clients often come to see me seeking to change beneficiaries in a will or living trust. Based on my years of estate planning practice, it is one of the most common reasons to amend a will or trust.
There are many reasons why you may want to change beneficiaries of a will or trust. Parents who list their children as beneficiaries often have a falling out or a broken relationship with their son or daughter. Some people have friends, neighbors or other relatives listed as beneficiaries. Maybe those people have died, you have lost touch with them or have just decided that their inheritance should go to someone else.
When you want to make a change of a beneficiary, the process is ordinarily pretty straightforward. First, you will need to amend your existing document. It is called a codicil when the document to be changed is a will and technically it’s not an amendment to a document but rather an addition or supplement to the existing document. It’s called an amendment when you are changing a living trust but not changing and superseding the other terms of the living trust. When you are changing and superseding the other terms of the living trust, it’s called a trust restatement.
It’s important to remember that any beneficiary designations you make on a life insurance policy will trump the selections in your will or trust. So if your will says everything to your three children in equal shares but your bank account is payable on death to two of your children in equal shares, that third child is gonna be disappointed when he finds out he is not entitled to any of the proceeds of the bank account, regardless of what your will says.
Finally, when you are changing the beneficiaries, you want to make sure that the process is handled properly by an estate planning attorney.
As an aside, you always want to make sure you use the right attorney for the right job. For an amendment to a trust or will, use an estate planning attorney, someone who practices almost exclusively in that area. The practice of law is similar to the practice of medicine…you don’t want your podiatrist offering you heart health advice…you need a cardiologist for that. And you don’t want a divorce lawyer handling your estate planning amendments. You’ll get peace of mind knowing the person handling this task knows what they are doing and does it regularly.