What You Should Know About Your Beneficiary Designations

Part of planning your estate thoroughly is making sure all your beneficiary designations are in order. There are certain types of assets (generally, financial accounts and insurance policies) that will allow you to designate beneficiaries. These designations allow for an easy transfer of those account benefits to your beneficiary after you pass away. Having this easy transfer is critical, as the assets can be highly valuable.

The following are just a few tips for the proper handling of your beneficiary designations:

• Update your beneficiaries: It is not enough to simply name a beneficiary once and be done with it. It’s important to update your beneficiaries as needed after major life events, such as marriages, divorces, births or deaths. This ensures the person you actually want to receive the benefits will do so.
• Consider your estate plan: Keep in mind that beneficiary designations are independent of wills and other estate planning tools. However, the estate planning decisions you make may very well inform whom you name to be a beneficiary on your accounts or insurance policies, and vice versa.
• Naming trusts as beneficiaries: You may choose to name a trust as a beneficiary, but it is a good idea to work with an attorney. It makes the most sense if you have minor children and are divorced or are in a second marriage — you will want those benefits to be protected for your children in the long term. Legal counsel can help you navigate the tax implications that go along with naming a trust to be a beneficiary.
• Consider growth: Some accounts and policies may grow quicker or become more valuable than others, so make sure you consider how the assets will grow when naming beneficiaries.

To learn more about beneficiary designations and how to handle them in your estate plan, contact a knowledgeable Tampa estate planning lawyer with BaumannKangas Estate Law.