Avoiding Mistakes With Beneficiary Designations
While some Floridians may have estate plans in place that they feel will make certain their wishes are followed, some fail to pay attention to the beneficiary designations they have made on their life insurance policies, retirement and other accounts. Not paying attention to these beneficiaries can cause significant problems after a person has died, sometimes resulting in the proceeds passing in a manner that was not intended at all.
One problem that sometimes occurs is when people fail to update their designated insurance policy and retirement account beneficiaries after they divorce. Even if it is clearly stated in a will that the proceeds are to pass to children, if the ex-spouse is the listed beneficiary, the account proceeds will instead pass directly to them outside of the will.
Another problem occurs when people fail to designate any intended beneficiaries for their retirement accounts. If a beneficiary is not designated, then the proceeds will pass according to the plan’s administrative guidelines. Normally, this may mean that the proceeds will be sent to the estate, which may not pass them on to the person that was intended to receive them.
People may also choose to designate a life insurance trust as the beneficiary of their life insurance policy. This may help to provide for beneficiaries of the trust itself, including those who are minors. People who are interested in trust planning may want to talk with their estate planning attorney who can recommend different types of trusts, depending on the client’s individual goals and estate needs. Upon choosing a trust type, an attorney may then draft the necessary documents to establish the trust and to provide for its funding.