Most individuals do not give the necessary attention to how they designate their beneficiaries. In many cases, the very professionals you rely on to provide proper advice are either not aware of how to do it or do not make it a priority. Unfortunately, in either case, the potential consequences include loss of control, loss of significant money, and the incalculable effect it can have on family harmony.
Naming beneficiaries seems pretty straight forward, but there may come a time when you forget who you’ve selected on various accounts. Thankfully there are shortcuts around this issue, you just have to know when and where to take them.
When it comes to proper estate planning, the shortcuts are the existing options you already have with insurances and retirement accounts that allow you to designate your beneficiaries on a simple beneficiary designation form.
For many of us, the beneficiary form is the first practical experience we have with estate planning. For thoughtful and downright tactful tips for designating your beneficiaries designations, consider a recent article in Fox Business titled “Bulletproofing Your Beneficiaries.”
When it comes to beneficiary designations, some of them are shortcuts and some of them are dead-ends, and still others can completely undo your estate plans if you simply forget about them. That noted, there are at least two key points to consider. The second point is the beneficiary designation must be coordinated with your overall estate plan to the right beneficiaries (or even a system of trusts) to eliminate probate and minimize taxes. The first point, and a source of immediate concern, is that you must know who all of your beneficiaries are on all your accounts at all times.
If you don’t know all of your beneficiaries, is it time for a “beneficiary audit” of all your accounts? You may want to consider reworking those designations to meet your distribution goals and ensure that your plans will end up as you intended.
Reference: Fox Business (October 1, 2012) “Bulletproofing Your Beneficiaries”