Most everyone has filled out a beneficiary designation at some point. In fact, most people have several active beneficiary designations at any given time. What many people don’t know, is that these beneficiary designations supersede any instructions you may have outlined in your will. The assets in any type of account covered by that designation will be transferred immediately to your named beneficiary upon the event of your death, without having to go through probate – even if your will specifically indicates something to the contrary. Therefore, it is very important to review your beneficiary designations periodically.
It’s a good idea to keep copies of your current beneficiary designations in order to more easily keep track of them as the sources can be many. Insurance policies, annuities, 401(k) plans and IRAs certainly come to mind, however checking, savings, and investment accounts may also provide beneficiary designations, also known as a transfer on death (TOD) option. Some states also allow a TOD option for vehicle registrations and real estate deeds.
It’s especially important that all your existing beneficiary designations are reviewed and updated when major life changes occur. This includes your own marriage or divorce or that of a close family member, or a birth or death in the family. The tax and probate implications for your beneficiaries and for your estate can be complex, depending on whether you choose to designate your spouse, someone other than your spouse, a charity, a trust or your estate. We are here to help you navigate those complexities – give us a call.