People often fail to turn in their beneficiary designation forms, or the forms are not kept up to date. However, checking the designated beneficiaries on all accounts at least once a year should be an estate planning fundamental for all Arizona residents. This includes all bank accounts, brokerage firm accounts, retirement accounts, employee benefit plans, life insurance policies, annuities and college accounts.

When your life circumstances have changed, it becomes even more important to designate the appropriate beneficiaries on your accounts. This will ensure that your wishes are carried out in the event of your death.

Updating beneficiaries is especially important after a divorce if you intend for the assets in your accounts to pass to someone other than your ex-spouse after your death. If the designated beneficiaries are not updated, it may be impossible for the people you intend to receive your estate to convince a probate court of your intentions.

A recent U.S. Supreme Court ruling held that beneficiary designations take precedence over state law. Unfortunately, in that recent case, the deceased's children argued that they should receive their expected inheritance all the way up to the U.S. Supreme Court. Ultimately, however, the money was given to man's ex-spouse because she was the designated beneficiary.

In a similar U.S. Supreme Court case, an outdated beneficiary designation still was valid and upheld even though a divorce agreement specifically addressed the issue of who should receive the death benefit from a company savings account. In that case, the ex-spouse received the death benefit as the designated beneficiary, while the intended beneficiary got nothing.

Other life changes, such as the birth of a grandchild or the disapproval of a child's behavior, should also be a reason to check your designations. In addition, married couples should keep in mind that either spouse could die first, so naming secondary beneficiaries is helpful in the event that the designated beneficiary is already deceased. Designating beneficiaries now will not only ensure that your wishes will be carried out upon your death, but it also may help to avoid probate court which can be time-consuming and expensive for your heirs.

Source: SmartMoney.com, "Make This Estate Planning Move Now," Bill Bischoff, 10 Aug 2011