Beneficiary Designations - Handle with (Extreme) Care

Today, retirement accounts and life insurance are common - and significant - assets owned by American adults. One option to quickly distribute assets the proceeds to heirs after someone passes away is by filling out a beneficiary designation form for each asset. 

Warning: Before you rely on beneficiary designations alone to distribute your estate, there are a few things you should know. 

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, then 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.

Many Americans believe all the only estate planning they need can be accomplished by beneficiary designations on their retirement accounts, life insurance and even other assets. In some cases this actually may be true. Nevertheless, an effective and efficient estate plan usually employs a variety of legal tools to distribute the estate.

Be sure to consult an experienced estate planning attorney to learn you options.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.

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