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Beneficiary Tips

An important part of creating your estate plan is naming your beneficiaries. They are the people named as recipients of your assets, so you will want to make sure they are designated correctly. It is good practice to check them once a year in order to make sure no changes need to be made. You can make an appointment with our estate lawyer in Cary NC to get started. 

Beneficiaries | Estate Lawyer in Cary NC

In addition to your will, there are other policies and accounts that require a beneficiary. Here are some of the places where they can be found:

  •         Retirement plans such as 401ks, 403bs or a SAR/SEP through an employer
  •         Traditional and Roth IRAs
  •         Life insurance policies
  •         Stock options
  •         Annuities
  •         Accounts that are transfer-on-death (TOD) or pay-on-death (POD)

It is important to name a beneficiary for each of these because if no one is named, the account or policy may be subject to probate, which is a timely and costly process that could result in paying fees and taxes that could reduce the amount distributed. Most policies have an option for a secondary or “backup” beneficiary. You should name a second party in case something happens to both you and your primary beneficiary.
The people named on your policies and accounts should also match what is outlined in your will. They operate independently of each other, but it is best to make sure everything is consistent to avoid confusion later on.
If a major life change occurs such as a marriage, divorce, birth, or death, then who you designate as your beneficiary may need to be changed. If you get a divorce and do not change your beneficiary from your former spouse, he or she will collect on your policy or account. Even if you have updated your estate plan and will to reflect changes, the person named in the actual policy or on the account overrides what is in your will.  Many people review their estate plan and policies once a year in order to ensure that everything is up to date.
If you are designating different accounts for multiple heirs, such as adult children, keep in mind what type of accounts you are distributing. They may increase in value unevenly, making the amounts the children receive different. This can cause hurt feelings and confusion later on if they do not understand why they may have received less than a sibling. When naming a beneficiary, check with your attorney before designating minors, such as your children, because you may be better served to create a trust.
If you are considering naming your estate the beneficiary for a policy or account, consider that it may have to go through probate court before it is distributed. There may also be tax consequences that can decrease the payout. Consult with an estate lawyer in Cary NC before making that type of designation.
When filling out your policies, make sure that you read the instructions to ensure that you are filling out the forms correctly. If you have questions, a lawyer with experience in estate planning can help answer them. Eldreth Law Firm's estate lawyer in Cary NC has years of experience in estate law and can help you with planning needs.

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