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Managing beneficiary designations when planning for the future

On Behalf of | Apr 2, 2020 | Estate Planning |

When people in Florida go to a bank or an investment advisor to set up a new account, they may be asked about their beneficiary designations. While these conversations often take place outside the estate planning process, they can have a significant effect on the future of any person’s assets. Many people are familiar with beneficiary designations through 401(k)s or life insurance policies. The named beneficiary will receive the balance of the account in case of the death of the account holder without the funds going through the probate process, which can save time and money.

Many people plan for their assets to pass through beneficiary designations because of the complexity that it can remove from the estate process. People can receive the funds quickly, which may be important due to funeral expenses and other end-of-life costs. In addition, the process is completed more privately than a probate action; unlike wills, beneficiary designations are not entered into public record. However, there are also concerns that people may want to keep in mind. In the first place, these designations should be current; a former spouse, for example, could still receive an account if they are listed as the beneficiary long after the divorce, even if legal action later ensues.

Updating these designations during life changes like marriage, childbirth and divorce can help to prevent complex problems down the line. However, people may also want to consider whether they want to name a trust as a beneficiary instead of an individual in order to provide the greater control and potential tax savings afforded by certain types of trusts.

There are a number of issues for people to consider when making an estate plan, including ensuring that their documents are up to date. An estate planning attorney may help people develop a comprehensive plan for their assets.