Estate planning involves the careful coordination of multiple documents and strategies to ensure your assets are distributed according to your wishes after your passing. One essential technique in this process is the use of beneficiary designations.
What are beneficiary designations, and how are they useful?
Beneficiary designations are nonprobate transfers, meaning the property bypasses probate by simply naming a beneficiary on the account, title, or asset. This method offers the advantage of making assets immediately available to the beneficiary while keeping the transfer private and outside of the court process.
What can I put designations on?
- Bank accounts
- Vehicle titles
- Investment accounts
- Retirement accounts
- Life insurance policies
- Real estate
When should I utilize them?
As soon as possible. Once you open an account or buy a vehicle, it is a good idea to include a beneficiary designation on it. It is also a good idea to keep your designations up to date as much as possible.
Accordingly, to verify that the designations are done properly, particular attention needs to be given. If set up incorrectly or not updated, then you risk the asset being subject to the probate process.
