No matter the size of your estate, you likely store some of your wealth in financial accounts and institutions. Often, these accounts will let you nominate an heir—someone who will inherit the account and its contents when you die. These provisions are called beneficiary designations, and they are critical to your estate plan. California Estate Planning Lawyer Kavesh Minor & Otis

Understanding Beneficiary Designations

Beneficiary designation arrangements are common. Some financial services and accounts require that the primary account holder nominate an heir or beneficiary. You may be asked to designate a beneficiary for:

  • A life insurance policy
  • A pension
  • A checking or savings account
  • An investment retirement account (IRA)
  • A set of bonds
  • A stock portfolio

Beneficiary designations are similar to other “payable-on-death” accounts; thus, while you are still alive, your beneficiary has no rights to access your account or assets. Once you pass away, they will receive the contents. 

How to Choose a Beneficiary

Your selection of beneficiaries should be aligned with your existing estate plan. Your ideal beneficiary is someone you trust and someone you wish to provide for once you have passed away. Before nominating a beneficiary, you might want to consider the following questions:

  • How does an intended beneficiary fit into my estate plan?
  • Does my beneficiary have the life experience and mental capacity to receive a direct disbursement, or should I condition their inheritance through a trust?
  • Would the proceeds from my account jeopardize an heir’s eligibility for government benefits or federal financial aid?
  • Will California’s joint tenancy or community property laws affect my assets?

Why You Should Keep Beneficiary Designations Updated

You should always keep your beneficiary designations up to date. If you do not name beneficiaries or keep your designations updated, it’s possible that:

  • A financial institution’s internal policies could dictate where your money goes.
  • The proceeds of a life insurance policy could be distributed to your estate, resulting in all of your heirs getting a smaller inheritance.
  • An ex-spouse or estranged relative could receive proceeds from a beneficiary designation you never changed.

Do You Need To Speak With An Attorney About Estate Planning?

If you need to speak with an experienced estate planning lawyer please contact us online or call us directly at 800.756.5596 to first register for one of our free, informative seminars. Your attendance will qualify you for a special discount for our estate planning services should you decide to make a free appointment at the conclusion of the seminar and choose to proceed with us. We proudly serve clients throughout California with offices in Torrance, Newport Beach, Orange, Woodland Hills and Pasadena.

 

Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.