Designating Beneficiaries
by Colleen Hoch Hauser, Money Mentors While nobody likes to talk about it, Estate planning is an important part of every financial plan to decide what happens with our assets after we pass away. As a part of this planning, you will need to designate your beneficiaries – that is, choose who you leave your assets such as funds, income or payment from an investment, retirement pension or savings plan, insurance policy, property or other assets. ...................................................................................................................................................................
A beneficiary can be a person, estate or entity, although the most common are spouses/common-law partners, children, relatives, friends, and charities. You can name one person or several loved ones to share the proceeds. Be specific as whoever you choose will receive all or portions of your assets when you're gone. Most retirement plans annuities and life insurance policies let you designate beneficiaries providing you the final say over who receives your death benefit. Some policies allow you to name a contingent beneficiary as the second in line to inherit assets, should the primary beneficiary not be alive to collect the assets. For example, a wife names her husband as the primary beneficiary on her life insurance policy and names her adult son as her contingent beneficiary. If the husband and wife die at the same time, or the husband dies before his wife, the son would receive the funds from his mother’s insurance policy. Carefully consider your options before choosing your heirs, as beneficiary designations allow assets to pass outside of your estate and avoid probate. Consider the needs of your spouse, children with special needs, minor children and aging parents. If you name minor children as beneficiaries, you will also need to name a trustee until those children reach legal age. Communicate your wishes clearly. After you decide, we recommend informing your spouse, other beneficiaries, your executor and other family members. Remember, these assets do not necessarily go to the same person you have named in your Will. Make sure your beneficiary arrangements are up to date at all times.
