What to Consider When Naming a Beneficiary For Your Estate Plan

woman about to sign a will - naming a beneficiary concept

When preparing your estate plan, you will need to consider and name beneficiaries who will inherit your assets. Your beneficiaries can receive assets from your will or trust, through life insurance policies, as part of a retirement plan, or through stocks, bank accounts, and other documents.

Bill Ager will work with you to properly prepare your estate plan. He provides customized and understandable estate planning for reasonable flat fees. Bill is an experienced estate planning attorney who practices throughout Washtenaw County and provides an initial free consultation..

The Importance of Naming a Beneficiary

Designating your beneficiaries is an important part of any estate plan, even if you have a relatively small estate. By naming your beneficiaries, you control who will receive your assets, how much they will receive, and when they will receive them.

If you do not designate beneficiaries or if you name the wrong beneficiaries, part or all of your estate could end up with the wrong people or organizations.

Who Can Be a Beneficiary of Your Estate?

You can name individuals, trusts, or organizations as designated beneficiaries to receive part of your estate. You can designate the beneficiaries as a class by identifying the beneficiaries as “my children” or “my grandchildren,” or you can specifically name beneficiaries by leaving your assets to “my children, John Smith, Jr. and Jane Smith.”

Beneficiaries of Insurance Policies and Retirement Accounts

Retirement plans, insurance policies, and investment accounts often include beneficiary designations. The beneficiary designation on these documents works the same as those contained in your will. You name the person, trust, or organization that you choose to receive your assets. But rather than including the beneficiary designation in your will or trust, the designation is made contractually with you insurance company or plan provider and can be easily changed.

Choosing a Beneficiary

There is no quick answer to the question of who you should choose as your beneficiary. Every estate plan requires individual discussion regarding your goals and the impact of a bequest on potential beneficiaries. Bill Ager can help you choose a beneficiary that will best fit with your personalized estate plan.

Unique circumstances may influence your choice of beneficiaries. For example, if a loved one has special needs or your beneficiaries are minor children, it might be wise to designate a trust as the beneficiary rather than an individual. When dealing with retirement accounts, it might make sense to designate an individual as the beneficiary to take advantage of potential tax deferment.

It is also important to consider choosing a successor beneficiary (or beneficiaries) in your will, trust and accounts, should the beneficiary first chosen predeceased you.

How to Name Beneficiaries in Your Estate Plan

When deciding on your beneficiaries, specificity is often better. Your will is often more clear if you identify your beneficiaries by name instead of as a group. For example, rather than leaving your assets “to my children,” eliminate confusion by identifying each child who should receive a share of your estate.

Similarly, be sure to identify the correct person, especially when there are similar names within a family. If someone is a Jr. or the III, include those designations.

Coordinating and Updating Beneficiary Designations

Just like your will, you should review and update your beneficiary designations every few years to ensure they still reflect your wishes and the state of your family. You should also review beneficiary designations after major life events like a birth, death, marriage, divorce, or change in financial status.

When you review and update your beneficiary designations in your will or trust, be sure to update beneficiary designations on other accounts with beneficiary designations, like retirement accounts, bank accounts, and insurance policies.

You will also need to coordinate beneficiary designations across your estate plan. For example, if you and your spouse have a joint bank account with a right of survivorship, assets in that account will transfer automatically to your spouse, even if provisions in your will state otherwise. To ensure your wishes will be carried out, it is important to understand different types of beneficiary designations and how they impact your overall estate plan.

For Experienced Estate Planning in Ann Arbor, Contact Ager Law

Ann Arbor estate planning attorney Bill Ager helps individuals and families with all aspects of estate planning. He is proud to serve people throughout Washtenaw County.

For additional information on our reasonable flat fees for estate planning services, contact our experienced estate planning attorney, Bill Ager for a free consultation. .

Categories: Estate Planning