- Don’t Forget to Name One – Your beneficiary designation should be chosen carefully and used to add value and efficiency to your estate plan. Not having one is never the proper choice.
- There is Something Called a Contingent Beneficiary – When we review beneficiary designations with clients, they tend to only list a primary beneficiary. Don’t forget to consider or name a contingent beneficiary.
- Update Your Designations – As life changes, your beneficiary designations should too. Kids grow up, babies are born, loved ones pass away, you get married, sometimes divorced and the list goes on. Any major life event can lead to changes in beneficiary designations. Make sure to keep your plan up to date.
- Coordinate Designations With Your Estate Plan – The best written legal documents can go to waste if you don’t examine these designations and coordinate them properly with your estate planning documents. A beneficiary you list on a certain policy can override whatever is listed on your legal plan. Keep documents consistent.
- Consider the Tax Implications – You should always consider what type of taxation will occur upon passing an asset on to someone else. The proper use of beneficiary designations can lead to tremendous generational tax savings or could cost a beneficiary thousands if not done properly.
- Know Your Beneficiary – Minor children should never be listed as beneficiaries. Trusts and Estates should be listed with caution and you should consider bringing in your tax and legal advisors for counsel when making these important decisions.
- Consider a Charity – There are tremendous tax and financial advantages to consider leaving a charity as a direct beneficiary on certain assets and accounts to maximize gifting and reduce taxes.
A simple designation can have a huge impact on your estate plan. Make sure you review your beneficiary designations and coordinate them properly and efficiently with your estate planning.
