What Are Beneficiary Designations in Florida?
As you explore the various estate planning possibilities, you may come across the concept of a “beneficiary designation.” This can be a confusing concept for many, especially if you’re already familiar with the term “beneficiary” in the context of a Last Will and Testament. However, beneficiary designations and Wills are two separate concepts. When might you need a beneficiary designation and can an estate planning lawyer in Martin County or Palm Beach County help?
Beneficiary Designations vs. Wills in Florida
Beneficiary designations are distinct from Wills because they pertain to specific assets. A beneficiary designation might state that a specific beneficiary will receive an asset when the grantor passes away. In contrast, a Will has more generalized terms and describes the inheritance of numerous assets instead of just one.
Another major distinction is the fact that beneficiary designations “supersede” Wills. In other words, beneficiary designations are processed before assets reference in Wills go through probate. Assets that have beneficiary designations do not require probate, and so they allow for the immediate inheritance of assets after the grantor’s passing.
When Should I Use Beneficiary Designations?
Beneficiary designations can be helpful when leaving behind various assets. Usually, these assets are financial accounts of some kind. Accounts that benefit most from beneficiary designations often have death benefits, and common examples include 401(k)s, IRAs, and life insurance policies. That said, you can attach a beneficiary designation to virtually any bank account.
t is also possible to use a “beneficiary deed” to transfer ownership of real estate without going through probate. This is also called a “transfer-on-death deed.”
Coordinate Beneficiary Designations Carefully With Your Will
A Will is considered the “bare minimum” for an estate plan in Florida. As a result, those who have beneficiary designations should still also have Wills. Beneficiary designations do not replace Wills but augment them.
Beneficiary designations are legal contracts, and their terms typically override the grantor’s Will or trust. Because of this, there could be a situation in which the beneficiary designation is at odds with the Will. For example, a grantor might leave his 401(k) to his grandchild using a beneficiary designation. However, their Will might state that the 401(k) should pass instead to his wife.
To avoid various issues and complexities, many people name their trusts as account beneficiaries. This strategy means that regardless of any changes in family dynamics, the trust will always receive the account through the beneficiary designation. If the grantor needs to make changes, they can adjust their trust instead of creating a new beneficiary designation.
Can an Estate Planning Lawyer in Palm Beach Gardens Help Me With Beneficiary Designations?
An estate planning lawyer in Palm Beach Gardens may be able to help you create beneficiary designations. These are common and popular aspects of effective estate plans, and they may be beneficial for you. However, it is important to discuss your unique circumstances with an estate planning attorney before making any major decisions about your estate plan. To continue discussing beneficiary designations in Florida, reach out to Kitroser Lewis & Mighdoll today.
Sources:
investopedia.com/terms/d/designated-beneficiary.asp
flsenate.gov/Laws/Statutes/2021/Chapter711/All
