When making decisions related to estate planning matters, many individuals wrongly assume a will is the only document needed to fulfill their wishes. While an updated will is certainly important and can be used to designate many estate planning matters, it's essential that individuals ensure beneficiary designations on related accounts are regularly updated.

Life insurance policies, retirement accounts and investment accounts all require an individual to name at least one primary beneficiary. If these documents are not regularly updated, the assets held in these accounts, which are often sizable, may pass directly to an unintended heir.

For example, say a couple divorced and the man updated his will to remove an ex-wife as the primary beneficiary to his retirement and investment accounts. However, despite making these changes to his will, the man failed to fill out and file the forms required to officially change the primary beneficiary. As a result, when the man died seven years later, his ex-wife inherited the $400,000 the man intended to go to his children. In this case, the U.S. Supreme Court ruled that the official beneficiary designations overruled the more recently updated will.

Even happily married individuals would be wise to regularly revisit their beneficiary designations to name and update secondary beneficiaries. If an individual's life insurance policy names a spouse and that spouse dies before the individual, updates are necessary to avoid probate and ensure assets pass directly to intended heirs and beneficiaries.

In most cases, updating a beneficiary designation is a simple process. Accounts that require a beneficiary include investment accounts, employee-related retirement accounts, life insurance policies and 529 college savings accounts.

Source: The Wall Street Journal, “Don't make this common estate-planning error,” Bill Bischoff, Sep. 17, 2013