Beneficiary Designations 101 for Houston Families

Signing document close upThe decision about how to designate beneficiaries for your company retirement plan, life insurance policies, and other assets might seem like a no-brainer. Chances are you would like those near and dear to you to inherit any money you've accumulated during your lifetime, so making sure that happens should be as simple as writing their names on the appropriate forms, right? Not so fast.

Have you designated beneficiaries on the appropriate accounts? Are you sure you did it right?

A good estate plan uses a wide-variety of vehicles to distribute the estate. Today, that normally means that retirement accounts and life insurance are used to help quickly distribute assets to heirs after someone passes away. Because of this importance, you need to know how to go about designating beneficiaries to receive the assets.

A recent article in Morningstar, titled "How to Handle Beneficiary Designations," provides a list of things you should consider, to include:

  • Know the basics – It is important to know what documents you can use to designate assets to beneficiaries and know that the assets will automatically pass to the beneficiaries after you pass away.
  • Keep Designations Current – You should review your designations regularly and make changes as appropriate.
  • Consider Tax Consequences – Your beneficiaries might have to pay taxes on the assets.
  • Be Specific – If you want a beneficiary to distribute the assets to other heirs, you need to state how specifically.
  • Give special consideration to special needs loved ones – Consider how heirs with special needs will inherit and handle the assets.
  • Know about other estate planning tools – You need to know what else you can do to plan your estate.

The list is a good one and the last item is perhaps the most important. You cannot use beneficiary designations in this way for all of your property, so visiting with an estate planning attorney about what else you need in an estate plan is a must.

For additional information on estate planning and elder law in Houston, please click here to visit my website.

Reference: Morningstar (October 10, 2014) "How to Handle Beneficiary Designations"


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