Designate one or more beneficiaries and ensure certain assets can quickly go to those who need them most
Designating one or more beneficiaries is extremely important when it comes to estate planning. This action names the heir(s) to an asset if you pass away. These assets are transferred to the beneficiary immediately, regardless of the specifications included in the Last Will and Testament.
The types of assets that allow beneficiary designations include: financial accounts, life insurance policies, retirement accounts, and others. The designation avoids probate and prevents misunderstandings.
Beneficiary Designations and Retirement Accounts
A retirement account is usually passed down through a beneficiary designation, not a trust or a will. This ensures that the inheritor gains access to the assets quickly, and that they cannot be a matter of debate. Beneficiary designations also prevent the need to pay certain taxes.
What issues arise if you do not designate a beneficiary?
The most immediate consequence is that more taxes will have to be paid in order to process your assets. However, not designating a beneficiary also means that the assets might be transferred to unintended recipients.Beneficiary designations supersede Wills and intestate succession laws, making them useful if you are unable to update these documents.
Primary and Contingent Beneficiaries
Primary beneficiaries are, as the name implies, first in line to receive your assets. If this individual passes away or cannot inherit the assets, they will be passed down to a contingent beneficiary. This later designation works as a backup, but still benefits from bypassing probate. Book a meeting with us from anywhere in the City of Columbia, Missouri, and designate your beneficiaries now.
