Ask an average person to define estate planning, and chances are good they’ll start describing long meetings with a lot of paperwork and complicated forms. However, that doesn’t have to be the case, says this article from InsuranceNewsNet.com, “A simple way to simplify estate planning.” It focuses on the use of beneficiary designations on a number of accounts that can make an estate plan a much simpler experience in many situations.
Beneficiary designations are primarily used on the following types of accounts:
- Employer-sponsored retirement plans, like 401(k)s
- Life insurance policies
- Transfer on death investment accounts
- Pay-on-death bank accounts
- Stock options
- Executive deferred compensation plans
Making sure to keep track of the person who has been named the beneficiary and keeping that information up to date is extremely important. It’s not always done correctly. The consequences of having the wrong person named on the asset can be infuriating and, unfortunately, permanent.
The importance of the beneficiary designation means you’ll want to:
- Remember who you have named a beneficiary of what account. People usually name their spouse as a primary and a child as a contingent. If you only have a primary, consider a charity that has meaning to you as the contingent beneficiary.
- Update your beneficiary designations, as life events occur. That includes births, deaths, marriages, divorces, etc.
- Read the instructions on the beneficiary designation. Not all forms are alike.
- Don’t name your estate as a beneficiary.
- Understand the tax implications of naming the beneficiaries. Not every asset has the same tax treatment.
Speak with your Cincinnati estate planning attorney to ensure that your beneficiary designations align with your estate plan. Remember that beneficiary designations supersede any provisions in your will. You should also talk with your beneficiaries—you may learn that they don’t want to inherit your asset (i.e., a person who is considering a divorce may not want the additional complication of a large inheritance).
Remember: “An ounce of prevention is worth a pound of cure. ” When making your estate plan or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
For more information about estate planning, probate or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).
Reference: InsuranceNewsNet.com (Nov. 2, 2018) “A simple way to simplify estate planning”