Whether your kids are in diapers or heading off to college you need a current Will and the correct beneficiary designations.
A common asset for people are individual retirement plans (IRAs) or employee benefit plans (usually 401(k) plans). Unfortunately, the beneficiary designations for those retirement plans is usually overlooked and the assumptions are incorrect.
Common Assumption: I have a Will and it includes a minor trust for my children. If my beneficiary designation says my children, then the retirement plan proceeds will be distributed in accordance with the trust. This is incorrect. The beneficiary designation on the plan controls the distribution, not the Will.
A typical designation for a married couple with children usually names my spouse as the primary beneficiary and my children as the contingent beneficiary. Assume that husband and wife pass away. The financial institution holding custody of the retirement plans will not pay our the proceeds to the minor children because they do not have the legal capacity to accept the money. So, the only alternative is to pay the funds to a conservator who is appointed by a court for the estate of the minor children. A conservatorship is a costly and time-consuming process. When a child attains age 18, then the conservator must distribute the remaining proceeds to the child. Alternatively, there are beneficiary designations that can be used to coordinate the distribution of the retirement plan proceeds with the trust in your Will or to appoint a custodian to manage the funds until your child reaches age 25.
In summary: Many times parents think/hope they filed out the beneficiary designation correctly, but upon review it does not include the persons or distribution plan that was intended. It is important to review your beneficiary designations to make sure that they comply with your intentions.