The Importance of Proper Beneficiary Designations
Estate Planning Attorneys in Palm Beach County and Martin County FL
There are advantages and disadvantages to naming beneficiaries on accounts as a part of your comprehensive estate plan:
As each person’s estate plan is meant to be highly individualized and comprehensive, it is of vital importance that your documented plan clearly designates beneficiaries for all of your assets upon your passing, which you do not want to have pass through your trust or via probate and your will.
Your life insurance policies and other related accounts should usually specify their own individual designated beneficiaries, with contingent beneficiaries named as well, just in case the named beneficiary predeceases you.
It is important to note that since the designated beneficiaries on these types of accounts supercede those specified in your Will or Trust, you should update your designated beneficiaries regularly on all accounts in which you have a named beneficiary.
Life events such as divorce, remarriage, births and deaths should trigger a review and possible update of your estate plan documents and your designated beneficiaries.
Among the benefits of properly documented beneficiary designations in your estate plan and financial accounts:
* Avoidance of the probate process, as the assets will go directly to the named beneficiaries upon your passing, saving both time and expense
* Diminishes the potential for future estate-related litigation
* Proper beneficiary designations will avoid common mistakes, such as naming someone under 18 as a direct beneficiary
Some of the disadvantages of using named beneficiaries exclusively:
* The inability to control the delivery of the asset over a structured time horizon
* The inability to appoint a trustee over the assets when a beneficiary is a minor or not responsible with assets
* The inability to provide income to one beneficiary for life and another after the first beneficiary dies
* The inability to plan for a beneficiary who is disabled and on government disability benefits
Knowing how to structure your estate and which accounts should have a beneficiary upon death named, and which should not, is a decision that should be made on a case-by-case basis and is unique to each family.
At Kitroser Lewis & Mighdoll, we take a comprehensive and holistic approach with each client, lending our decades of attorney experience in Estate Planning, Elder Law and other closely-related practice areas to assure that their plans are reflective of their needs, wishes and goals, and to provide each client with the security and peace of mind they require.
We look forward to working with you soon.
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