The designation of beneficiaries is an important aspect of estate planning. However, although this step is necessary for everything from life insurance policies to retirement accounts, many people neglect to consider it.
It is crucial to stay up to date on naming and updating beneficiaries for your retirement plans. These designations will supersede distributions through a Last Will and Testament, which means that you should update them any time you change your Will. If you wish to secure your plans for the future, a trustworthy lawyer could explain all the necessary steps and considerations for beneficiary designations in Cary.
Unlike with assets held in Trust or covered by a Will, retirement accounts are typically passed through a beneficiary designation. These decisions are important in ensuring a person’s retirement accounts will be passed on as they intended. Additionally, these transfers can also have significant tax implications. In some cases, the wrong choice of beneficiary could result in the acceleration of a tax bill upon the account holder’s death.
Accordingly, determining and updating beneficiary designations should be an important part of any estate plan. Discussing this decision with an experienced attorney could help a Cary resident avoid unintended tax consequences and ensure their final wishes are respected.
On top of tax repercussions, neglecting to designate or update beneficiaries could result in multiple problems. One of the primary risks is that assets could potentially be transferred to unintended recipients. Because beneficiary designations will supersede both Wills and intestate succession laws, failure to update them could counteract a person’s final wishes. For example, a person that goes through a divorce and fails to change the beneficiary designation on their life insurance or retirement accounts could unintentionally leave these funds to their former spouse.
Another potential problem involves unnecessary probate complications. Assets like IRAs and retirement accounts allow an individual to avoid probate entirely, but the wrong beneficiary designation could place these funds into probate. If a person’s estate is the beneficiary of these accounts, it could not only require probate but also complicate the tax circumstances of the estate. A knowledgeable local attorney could further advise on the impact of beneficiary designations on the probate process.
Most attorneys advise their clients to review their Wills every few years. The same is true for beneficiary designations. In addition to periodic reviews, it is also worthwhile to review these choices following major life events, such as:
Reviewing these designations often requires contacting each institution that a person has an account or policy with. It is also helpful to obtain written confirmation of each designation to ensure there are no unexpected consequences.
Estate planning lawyers can assist with more than just the formation of Trusts or the execution of a Will. Consult a legal advisor about updating your beneficiary designations in Cary to ensure that your final wishes are secure.
Let an experienced attorney help establish beneficiary designations that fit your estate plan. To discuss your options and set up a meeting with our team, call us today.