On September 5, 2013

Beneficiary designations play a big role in determining the disposition of assets upon a Denver resident’s death. Typically, these beneficiaries are named in the paperwork of financial assets such as investment accounts, IRAs and insurance policies. If there is a conflict between who is named in a will and who is named as a beneficiary in financial account paperwork, generally the financial asset paperwork takes precedent over the will.

There are two types of beneficiaries. The first is called the primary beneficiary. This person, generally a spouse, becomes owner of the assets immediately upon death. The second type is called the secondary beneficiary. This person becomes the beneficiary should the primary die before the original owner of the asset.

One of the big issues with beneficiaries is that once they are set up, they are seldom updated. For example, an investment account that was set up decades ago may have beneficiary designations that are no longer desired or appropriate. Life events of marriage, divorce, birth and death drive the need to periodically update the beneficiaries named in financial asset paperwork. When no beneficiaries are named, the assets could become part of an estate and result in costly probate expenses, taxes and delays in distributions.

Whenever there is a major life event in a person’s family, it is a good idea to review the beneficiary designations that were established. An attorney may be able to address estate planning concerns and establish a regular schedule of beneficiary review. This may help ensure that assets are distributed as desired at death.

Source: The Valley Business Journal, “Beneficiary Designations Play A Critical Role In Estate Planning“, Angela K. Sugmura, September 02, 2013

Categories: Estate Planning

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