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Beneficiary designations important to estate planning

| Oct 3, 2019 | Estate Planning |

When people in Pennsylvania plan for the future, it can be important to think about beneficiary designations as well as traditional options like writing a will. Once people have written a will or planned a trust, they may need to check to make sure their beneficiary designations are up to date and reflect their overall plans for their estate. Many types of accounts and assets do not pass through probate but are transferred on death through the naming of a beneficiary. The most well-known of these are life insurance policies, but retirement accounts, investment funds and even regular bank accounts may transfer in the same way.

In some cases, people can run into problems because they forget to change a beneficiary despite life changes that have taken place. In the most common example, people may not remove a former spouse as a beneficiary or add a new spouse, despite years of changed relationships. In some cases, it may be possible to correct the error after the distribution, but it requires significant evidence and a substantial cost in fees.

In other cases, people may have a complex estate plan that relies on a trust as the centerpiece for all distributions. In these cases, it may be important that accounts of this type name the trust as the beneficiary. People may encounter problems with their overall estate plan if they create a trust but fail to properly fund it by continuing to name individuals as beneficiaries of their major accounts.

Naming beneficiaries and keeping them up to date can be an important part of an overall plan for a person’s assets. An estate planning attorney may work with people to draft key documents like wills, trusts and powers of attorney and develop a comprehensive plan that reflects their vision for the future.